Samsung Electronics has estimated that its third-quarter operating profit soared nearly ninefold, as robust demand for memory chips from AI companies continues to create a supply shortage across the industry.

The world's largest memory chipmaker expects operating profit for the July–September period to reach 107.4 trillion Korean won (equivalent to $80.2 billion), a record high. This compares with 12.2 trillion Korean won in the same period last year and also exceeds the 106 trillion Korean won consensus estimate compiled by Refinitiv. Estimated sales came in at 195 trillion Korean won, up 126.6% year on year.

Samsung discloses preliminary profit and sales estimates ahead of the full quarterly report. This strong guidance marks the company's fourth consecutive quarter of record results and underscores the persistent supply-demand imbalance in memory chips: heavy purchasing by AI firms is driving chip prices higher.

Soaring memory chip demand is also putting pressure on other buyers of memory chips, such as phone and computer makers, which must absorb higher costs. Market research firm TrendForce expects contract prices for conventional DRAM, used for short-term data storage in devices, to rise 10% to 15% in the fourth quarter.

Analysts expect the chip shortage to persist into next year, with margins supported as companies sign more long-term supply agreements with AI firms. U.S. chipmaker Micron said last week that industry supply could tighten further over the next two years.

Kim Young-gun, an analyst at Mirae Asset Securities, said: "We expect memory chip supply to be tighter next year than this year. Newly signed long-term contract prices are higher than existing contracts." Han Dong-hee, an analyst at SK Securities, said the rise in long-term orders has weakened the industry's historical boom-and-bust cyclicality and reduced price volatility. In a recent research note, he wrote: "Even if the earnings peak is somewhat lower, the duration of high profitability will be significantly extended, maximizing cumulative cash flow."

In cutting-edge AI hardware, Samsung has been narrowing the gap with rival SK Hynix in recent years and has recently made progress on advanced HBM4 chips. However, some investors are skeptical about long-term chip demand, worried about fundamental risks in artificial intelligence. Some U.S. tech companies have already called for slowing the pace of AI development.

Investor concerns are reflected in the market: despite record profits, Samsung shares fell 1.8% on Thursday and are down more than 25% from their June high. Albert Yong, managing partner at Petra Capital Management in Seoul, said: "Investors are no longer just looking at a single quarter's earnings; they are waiting for clear signals on whether this upcycle can continue next year and the year after. They care more about when the industry will peak and whether the historically sharp boom-bust cycle will repeat."

Compared with U.S. peers, Samsung is undervalued. Its price-to-earnings ratio is 11.8 times, while the PHLX Semiconductor Index, which tracks leading U.S. chip companies, has a P/E of 39.5 times.

Samsung said it is the world's first tech company to surpass 100 trillion Korean won in quarterly operating profit. Memory chips used in data centers are core components of AI infrastructure, and strong demand has brought record profits and share prices to chipmakers such as Samsung. Samsung shares have more than doubled this year, with a market value of about $1.3 trillion.

Analysts expect the full report to reflect the negative impact of a sharply stronger Korean won—Samsung derives most of its revenue from overseas markets. The won appreciated more than 14% against the dollar in the third quarter, the largest quarterly gain since early 1998.

Rising chip prices are also weighing on Samsung's consumer electronics business, which struggles to pass on higher costs to end consumers. Analysts estimate that its phone and appliance businesses combined posted an operating loss of more than 1 trillion Korean won in the third quarter.