Samsung Electronics achieved its highest-ever quarterly performance in the third quarter of this year, but the concentration of profits in its semiconductor business has become more pronounced. The company reported that it earned 106.5 trillion won, or 99.2% of its total operating profit, from semiconductors, while its finished product divisions, including smartphones and home appliances, recorded an 800 billion won loss.
On October 29, Samsung announced its finalized results, reporting third-quarter revenues of 195.2532 trillion won and an operating profit of 107.4405 trillion won. This marks a 126.6% increase in revenue and a 782.5% increase in operating profit compared to the same period last year. Both revenue and operating profit have set record highs for four consecutive quarters. Samsung is the first global tech company to surpass 100 trillion won in quarterly operating profit, achieving an overall operating profit margin of 55.0%.
The growth in performance was primarily driven by the semiconductor division. The Device Solutions (DS) segment reported third-quarter revenues of 147.1 trillion won and an operating profit of 106.5 trillion won, accounting for 99.2% of the total operating profit. The operating profit margin for the DS segment reached 72.4%. When calculated hourly, the operating profit for the third quarter averaged about 11.6 billion won per day, or approximately 800 million won per minute.
The expansion of sales for high-value products such as High Bandwidth Memory (HBM) and solid-state drives (SSDs) for servers contributed significantly to the results. The ongoing investments in AI data centers by major global tech companies have led to a surge in demand for high-performance memory. Notably, sales of the sixth-generation HBM, HBM4, increased significantly, resulting in the memory business achieving its highest quarterly performance ever.
Improvements were also seen in the non-memory business. The System LSI segment experienced revenue growth by supplying system-on-chip (SoC) and image sensors with newly launched products in the second half of the year. Partnerships with new clients have also helped to solidify the customized SoC business. The foundry segment improved its performance through increased sales of HBM-based dies and advanced process products. Orders for 2-nanometer (nm) high-performance computing (HPC) semiconductors from global clients, including large hyperscalers, continued to grow.
In contrast, the Device Experience (DX) segment, responsible for smartphones and home appliances, remained in the red. The DX segment reported third-quarter revenues of 52.1 trillion won, an increase compared to the previous year, but recorded an operating loss of 800 billion won. This marks two consecutive quarters of losses following the second quarter. This is in stark contrast to the 3.5 trillion won operating profit recorded in the third quarter of last year.
The mobile experience (MX) and network business, which oversees smartphones, reported an operating loss of 600 billion won. Although sales increased due to the launch of premium new products like the Galaxy Z Fold 8, rising memory semiconductor prices have pressured manufacturing costs and profitability.
The TV and home appliance business also recorded an operating loss of 200 billion won. The video display (VD) segment saw a decline in sales following the conclusion of global sports events. While the home appliance sector increased sales through appliance subscriptions and business-to-business (B2B) initiatives, rising raw material and logistics costs negatively impacted profitability.
Harman reported solid sales in automotive and audio products, benefiting from U.S. tariff refunds, with revenues of 4.3 trillion won and an operating profit of 600 billion won. The display business recorded revenues of 8 trillion won and an operating profit of 1.1 trillion won. The performance of small and medium-sized panels improved due to increased supply to client new products, while large panels benefited from high-value product sales and cost reduction efforts.
Samsung anticipates that strong demand for AI semiconductors will continue into the fourth quarter, sustaining its growth trajectory. The DS segment plans to expand sales of high-value products such as HBM4, high-performance DDR5, and SSDs for servers. The foundry segment aims to increase production of advanced processes at 4nm and 2nm nodes to drive revenue growth and improve profitability.
Looking ahead to next year, Samsung plans to maintain its growth momentum centered on next-generation HBM and advanced foundry businesses. In the memory sector, the company will expand HBM4 supply while beginning mass production of the seventh-generation HBM, HBM4E. With semiconductor demand expected to significantly outpace supply due to increased AI infrastructure investments, Samsung aims to enhance profitability by increasing the proportion of high-value products.
In the foundry business, production at the Taylor, Texas facility will ramp up, and mass production of AI and HPC semiconductors based on 2nm technology will expand. The System LSI segment will focus on securing new customers for customized SoCs and expanding applications for image sensors.
Samsung will continue to invest in securing future growth drivers. The company has set its annual capital expenditure for this year at 84.4 trillion won, with plans to allocate 76.8 trillion won to the DS segment and 3.9 trillion won to displays. Research and development (R&D) expenses reached 14.4 trillion won in the third quarter alone.
Additionally, Samsung announced a large-scale shareholder return plan. The company will distribute a cash dividend of 4,601 won per share for both common and preferred stocks in the third quarter, totaling 30 trillion won. The overall shareholder return for this year is expected to range from 90 trillion to 110 trillion won, with 35 trillion won already executed or confirmed, leaving 55 trillion to 75 trillion won to be utilized for cash dividends and share buybacks or retirements.
Samsung plans to finalize its next shareholder return policy and the specific execution plan for the remaining funds at its board meeting at the end of January next year.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.