With their Q3 earnings reports approaching, Samsung Electronics and SK Hynix face "extremely high expectations," putting global AI transactions to the test.

Driven by robust AI-driven demand and advancements in next-generation storage technologies, South Korea's two chip giants, Samsung Electronics and SK Hynix, are at the heart of a global semiconductor "supercycle." With their third-quarter earnings reports approaching, their performance will be a crucial litmus test for the sustainability of profitability in the global market for "AI-driven trading."

The market currently has extremely high expectations for the performance of the two giants. According to data from FnGuide cited by the Seoul Economic Daily, Samsung Electronics is expected to achieve revenue of 199.1 trillion won and operating profit of 105.6 trillion won in the third quarter, while SK Hynix's revenue and operating profit are expected to reach 94.1 trillion won and 74.1 trillion won, respectively. The combined operating profit of the two companies may approach a record 189.9 trillion won, directly reflecting the strong market momentum amid the current chip supply shortage.

However, behind the dazzling financial figures, market consensus expectations have recently been slightly adjusted. Over the past three months, analysts have lowered their revenue and profit forecasts for Samsung Electronics by 2.6% and 4.4%, respectively, while their forecasts for SK Hynix have been lowered by 5.3% and 5%, respectively. This latest development is primarily attributed to the decline in dollar-denominated sales due to the strengthening of the Korean won, rather than a downturn in the memory market itself. However, this is enough to prompt the market to reassess the direct impact of exchange rate fluctuations on the short-term performance of tech giants.

Beyond the impressive figures, the upcoming third-quarter earnings reports will send deeper signals to the market. Investors are closely watching the sustainability of memory chip price increases, the profit-locking effect of long-term supply agreements (LTAs), and whether next-generation high-bandwidth memory can truly translate into underlying profits, in order to determine whether the current boom is a short-lived surge or a structural shift with long-term resilience.

Storage price increases slow, long-term contracts smooth out volatility.

The significant increase in the average selling price (ASP) of DRAM and NAND flash memory in the second quarter was the main engine driving the strong performance of both companies.

Entering the third quarter, the market expects prices to continue rising, but at a slower pace. Mirae Asset Securities predicts that Samsung Electronics' DRAM ASP will climb 16.5% in the third quarter, but the increase will narrow to 5.4% in the fourth quarter, suggesting that the price rebound may be losing some momentum.

The easing of this price surge is partly due to the increasing prevalence of long-term supply agreements (LTAs).

Currently, Samsung Electronics has secured 60% to 70% of its storage capacity through LTAs (Locally Available Agreements), while SK Hynix completed LTA negotiations with approximately ten key customers in the second quarter. These long-term contracts provide stability for companies, smoothing out the long-standing volatility in the storage industry. However, during periods of rapid price increases, LTAs also limit profit margins to some extent, as contract prices often lag behind spot prices.

HBM4 mass production accelerates, vying for core control over AI infrastructure.

The third quarter was also a turning point in the field of next-generation high-bandwidth memory (HBM4), which is indispensable for advanced AI applications.

Samsung Electronics expects its HBM4 sales to more than triple in the third quarter compared to the second quarter, driven by increased chip shipments to Nvidia's next-generation AI platform, Vera Rubin, and to account for more than 60% of its total HBM revenue in the second half of 2026. For SK Hynix, the challenge lies in maintaining its market-leading position in HBM3E while scaling up HBM4 production. The third-quarter results will provide initial clues to the landscape of this high-stakes competition.

This thirst for high-bandwidth memory is reshaping the underlying logic of the entire technology industry.

According to a report by KB Securities cited by *Global Economy*, with Meta launching Muse, an AI application based on intelligent agents, AI services are entering a new era requiring continuous, sequential operations and higher memory bandwidth. Traditional generative AI processes approximately 100 tokens per second, while the demand for intelligent agent AI has surged to 1,000 tokens per second. This tenfold leap in data processing volume is fundamentally changing the architecture of data centers.

KB Securities analyst Kim points out: "In AI data centers, GPUs are the heart, CPUs are the brain, electricity is the oxygen, and memory is the circulatory system that constantly supplies and circulates data. Ultimately, the key to the performance and efficiency of AI data centers will shift to memory."

This trend is already evident across a wider industry. AMD's recent entry into the "trillion-dollar market capitalization club" alongside Nvidia, Broadcom, and Micron, along with its 107% year-on-year surge in data center revenue in the second quarter, both indicate that the market's focus on CPUs and memory is now on par with that on GPUs. In response, Samsung Electronics has set its sights on next-generation "zHBM" technology, planning to stack memory directly on top of the GPU, and aims to provide samples by the end of 2027.

Wafer foundry business sees a turnaround, "chip inflation" tests end-user business

Besides its core storage business, Samsung Electronics' non-storage divisions are also under the scrutiny of the market.

After consecutive losses since 2023, Samsung's foundry business is widely expected to return to profitability in the third quarter, boosted by increased capacity and improved yield of its 4nm Language Processing Unit (LPU). If this target is achieved, it will significantly boost investor confidence and eliminate a major concern that has long dragged down Samsung's overall valuation.

However, Samsung Device Experience (DX), the division responsible for smartphones and TVs, is facing the "chip inflation paradox".

In the second quarter, the DX division recorded an operating loss of 8 billion won, as strong sales of high-end devices such as the Galaxy Foldables failed to offset rising component costs. Soaring memory prices, which are beneficial to the semiconductor business, have become a heavy burden on the terminal hardware division. The key question for the third quarter is whether sales of high-end products can absorb these cost pressures, or whether this "profit on one side, loss on the other" dilemma will continue.

Overcoming the "peak" debate and reshaping the long-term valuation logic

As the third-quarter earnings season approaches, the focus of the global semiconductor industry is shifting from the absolute size of profits to their sustainability.

Investors who have experienced past cyclical fluctuations remain vigilant. If Samsung Electronics and SK Hynix can prove that long-term agreements have effectively locked in demand, that HBM4 can generate substantial profits, and that the foundry business is back on track, then the current supercycle will be more resilient than ever before.

Conversely, if the price growth of DRAM and NAND slows down more than expected, or if the profit contribution of HBM4 falls short of expectations, the debate about whether the semiconductor industry has "peaked" will inevitably reignite.

In the coming weeks, these two earnings reports will not only determine the short-term market capitalization of the two giants, but will also set the tone for global technology infrastructure investment in the coming years.

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