Forward-looking: Samsung Electronics is locking in long-term chip orders as AI-driven demand continues to exceed available production, and the company expects those constraints to persist for years. Shortages are likely to deepen in 2027 and carry into 2028, Jaejune Kim, executive vice president of Samsung's memory business, told analysts. To manage that imbalance, Samsung has signed long-term supply agreements with the five largest global data center operators and is close to finalizing deals with five more.
Kim said those contracts will run for at least five years and account for 60% to 70% of the company's future capacity. The agreements include upfront payments and floor pricing, giving Samsung more predictability as it invests heavily in advanced chip production.
The approach reflects how AI infrastructure is changing the memory market. Large cloud and data center companies are no longer relying on short-term purchasing cycles. Instead, they are securing guaranteed access to key components, particularly high-bandwidth memory, or HBM.
Samsung's comments come after a period of volatility for chip stocks, driven by concerns about whether AI spending can hold up and how competition from China could affect pricing. Even so, analysts viewed the company's outlook as a positive signal. "Management's commentary on the conference call was better than expected, and it was one of the more reassuring calls we've heard in quite some time," Ryu Young-ho, a senior analyst at NH Investment & Securities, told Reuters.
The company's latest earnings show how strong that demand has been. Samsung's semiconductor division posted an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter, up more than 250 times from a year earlier. Overall operating profit for the quarter reached 89.5 trillion won, while revenue rose 130% to 171.5 trillion won.
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Those gains are being driven by higher memory prices tied to AI demand, but they are also creating pressure inside the company. Samsung's mobile division reported a 700 billion won loss, its first quarterly loss. "The chips enriching one side of Samsung are now hurting the other, leaving the group more exposed than ever to memory pricing and the durability of hyperscaler demand," said Josh Gilbert, an analyst at eToro.
A big part of Samsung's push is centered on HBM, which is used alongside AI processors from companies such as Nvidia and AMD. The company said it expects HBM4 revenue to more than triple in the third quarter. That growth could help Samsung close the gap with SK Hynix and bring its share of the HBM market closer to its overall DRAM share later this year.
Samsung is also working to expand its manufacturing capacity. Its foundry business, which competes with TSMC and Intel, is expected to improve as utilization rates rise and pricing remains strong. The company said its Taylor, Texas fab is on track to begin operations this year, with plans for a second facility that could start mass production in 2030.
Rival SK Hynix also reported strong results this week and said it plans to increase capital spending by about 50% to meet AI demand. Despite that competition, Samsung signaled it is comfortable with its financial position. CFO Park Soon-cheol said the company does not plan to issue American depositary receipts following SK Hynix's recent US listing, citing steady cash generation from its existing businesses.
Samsung is locking in five-year chip deals as AI demand shows no signs of slowing
