Samsung Electronics has entered into long-term supply contracts of up to five years with major global tech companies, aiming to establish a stable revenue structure. As the demand for semiconductor supply is expected to continue until 2028 due to the expansion of artificial intelligence (AI) infrastructure, Samsung has achieved record sales in both DRAM and NAND flash products.
During a conference call on its second-quarter earnings held on July 30, Samsung reported that its semiconductor (DS) division reached all-time high sales for both DRAM and NAND, driven by strong market demand and unmatched product competitiveness. The strong dollar also positively impacted the parts business, contributing approximately 3.1 trillion won.
The imbalance in the memory market is expected to persist. Kim Jae-jun, Vice President of the Memory Business Division, stated, "Considering the lead time of over three and a half years from new fab construction to production, meaningful supply expansion will be difficult until 2028. The unmet demand due to supply shortages will continue into next year and will worsen in 2027 compared to this year."
Samsung announced that it has completed long-term contracts with five global data center customers for five-year terms. The company is also pursuing additional contracts with five global hyperscalers. It has secured advance payments amounting to a quarter of the contract value and has locked in 60-70% of its total DRAM capacity under long-term agreements, significantly reducing performance volatility risks.
In the second half of the year, Samsung plans to increase the shipment proportion of HBM4 to 60% to solidify its technological leadership.
The foundry division is preparing to begin operations at the Taylor Fab 1 in the U.S. this year. Construction of Fab 2 is also set to start this year to gradually expand its 2-nanometer capacity, with mass production expected by 2030.
In the display sector, despite initial fixed cost burdens from the new 8.6-generation IT OLED operations, Samsung aims to enhance cost competitiveness through improved yields.
Capital expenditures (CAPEX) for the second quarter increased by 5.5 trillion won from the previous quarter, totaling 16.8 trillion won, focusing on infrastructure development at the Pyeongtaek campus, advanced R&D, and investments in the Taylor Fab in the U.S.
Regarding shareholder return policies, Samsung stated, "We are faithfully implementing our existing three-year regular dividend policy of 9.8 trillion won annually," adding that it is exploring various options for future shareholder returns, including special dividends and stock buybacks.
However, the company clarified that it is not considering issuing American Depositary Receipts (ADRs) for fundraising purposes.
To secure future growth drivers, Samsung has also restructured its organization. It recently established the 'RX Promotion Office' dedicated to its robotics business and has recruited top global talent led by Lee Dong-geon, head of the strategy team. The company plans to build a personal robotics ecosystem by combining on-device AI with its Knox security system and actively pursue mergers and acquisitions of promising overseas startups.
In the DX division, which includes home appliances and mobile, operating profit has declined due to rising component costs. Anticipating a slowdown in mobile market demand in the second half, Samsung emphasized, "We will focus all efforts on defending profitability through premium form factors like the recently unveiled Galaxy Z Fold/Flip 8 series and hyper-personalized AI agent services."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.