Samsung Electronics posted record earnings for a third consecutive quarter, with its semiconductor division — Device Solutions (DS) — generating more than 89 trillion won ($61.4 billion) in operating profit alone. The DS division earned 89.2 trillion won in operating profit in the second quarter, effectively accounting for the company's entire consolidated operating profit of 89.5 trillion won. Sustained AI data center investment from major US technology companies drove the result.
The finished-product Device Experience (DX) division, however, recorded an operating loss of 800 billion won as rising semiconductor prices squeezed component costs — a phenomenon analysts have dubbed "chipflation." It is the first loss for the division since it was created through a consolidation of the set business in 2021. Despite the cost pressure, the DX division's first-half sales surpassed 100 trillion won for the first time, indicating the company has successfully captured consumer demand.
Samsung Electronics on Thursday reported consolidated second-quarter sales of 171 trillion won and operating profit of 89.5 trillion won. The results surpassed the previous record set just last quarter — sales of 133.9 trillion won and operating profit of 57.2 trillion won — in a single quarter. Combined first-half operating profit reached 146.7 trillion won, approaching the 150 trillion won mark.
The DS division was by far the biggest contributor. It alone posted sales of 127.5 trillion won and operating profit of 89.2 trillion won. In the first quarter, the division had recorded sales of 81.7 trillion won and operating profit of 53.7 trillion won, meaning both figures grew 56 percent and 66 percent, respectively, in a single quarter.
Continued AI chip investment by major technology companies pushed memory chip prices higher. Against a backdrop of strong demand, DRAM and NAND both hit record sales figures, underpinned by the company's technological competitiveness.
In the memory chip business, Samsung actively responded to customer orders with a focus on server-oriented products and expanded supply of sixth-generation HBM4, moving to establish an early lead in the latest product segment.
The System LSI and foundry businesses, which have been running at a loss, also showed signs of a turnaround. System LSI achieved its best-ever first-half sales through expanded shipments of mobile system-on-chip and sensor products, even as overall demand softened. The foundry business, actively competing for orders from major technology companies, also saw sales grow on rising demand for HBM base dies and from customers in the Americas.
The DX division, by contrast, swung to a loss as component costs rose. Second-quarter sales came in at 48 trillion won, with an operating loss of 800 billion won. The mobile (MX) business accounted for the bulk of the shortfall, posting a loss of approximately 700 billion won.
MX division sales in the second quarter reached 33.2 trillion won, up from 29.2 trillion won in the same period a year earlier, driven by solid flagship sales led by the Galaxy S26 series and strong performance from the A series — but cost burdens intensified.
The Visual Display (VD) and Digital Appliances (DA) businesses, which handle televisions and home appliances, also saw second-quarter sales rise to 14.5 trillion won from 14.1 trillion won a year earlier, boosted by major sporting events and peak air-conditioner season. Even so, they could not escape cost pressures, recording an operating loss of about 10 billion won in the quarter.
Samsung Display posted second-quarter sales of 7.5 trillion won and operating profit of 700 billion won, improving on the previous quarter, as demand for small- and mid-sized OLED panels held firm and the gaming monitor market continued to grow. Harman also reported sales of 4.6 trillion won and operating profit of 400 billion won, supported by growth in automotive sales and rising demand for portable and personal audio products.
Looking ahead, semiconductors are expected to continue driving the company's overall profitability in the second half. The memory chip business will press further into the AI server market, including with seventh-generation HBM4E — samples of which Samsung shipped to customers last month as the first in the industry to do so. The company plans to expand sales of HBM4, DDR5, the SOCAMM2 low-power memory module, and enterprise solid-state drives.
System LSI will continue to grow sales of its next-generation flagship SoC while pursuing a new custom SoC business. The foundry division plans to begin mass production of second-generation 2-nanometer chips for mobile applications and to strengthen its long-term growth foundation around leading-edge processes.
The DX division expects a difficult operating environment to persist, given growing global uncertainty and rising component costs. The mobile business will seek to grow market share by increasing the sales mix of high-value products, including the top-tier Ultra model and the new foldable Z8 series. The TV and home appliance businesses plan to expand sales of AI-enabled products and improve profitability through differentiated product competitiveness.
jeongwan@heraldcorp.com
