Samsung's Operating Profit Set to Soar Amid Strong Demand for HBM4 Chips

Samsung Electronics (KRX: 005930) is staring down what could be its best year ever when it comes to operating profit. Industry analysts at KB Securities predict a jaw-dropping 108% spike in operating profit next year, pinning the surge on soaring interest in next-gen memory chips, especially the coveted HBM4.

The semiconductor wing of Samsung, known as the Device Solutions (DS) segment, is stealing the spotlight. Projections show this area tripling its operating profit to around 61.8 trillion Korean won. That's a massive jump driven mainly by growth in shipments and higher average selling prices of memory chips like DRAM, NAND, and system semiconductors.

Notably, Samsung's grip on the high-bandwidth memory (HBM) market, which supports heavy-duty computing platforms, is expected to tighten. The company's share supplying Nvidia's (NASDAQ: NVDA) Rubin platform is forecasted to double, powered by competitors having to redesign their chips. Total HBM shipments might increase by 2.5 times compared to last year.

Looking at the near term, Samsung's fourth quarter is already projected to show healthy momentum. Estimates indicate revenue climbing 17% year-over-year to 88.6 trillion won, with operating profit potentially soaring 147% to 16 trillion won. This would smash the previous quarterly record set back in 2021. The semiconductor segment's boost is expected from both higher chip prices and an upswing in shipments of the cutting-edge 12-high HBM3E memory, which should make up most of Samsung's HBM output by volume.

NAND flash memory isn't being left behind either. Growth in high-capacity embedded SSD (eSSD) shipments is anticipated to push profitability upward for Samsung's DS business, creating extra spark to its overall margin story.

Going forward, industry watchers highlight Samsung's focus on stacking gains in premium HBM4 production, which uses a unique 1c DRAM process alongside a 4nm logic die. This chip promises top-tier speed while keeping power consumption low, placing it on the premium end of the costly peer group spectrum. Despite a nearly 93% jump in Samsung's stock price over the past 12 months, the shares still trade at a discount, likely due to its slower start in servicing Nvidia's HBM demand compared to rivals.

However, the tides might be about to shift. Analysts foresee Samsung's HBM shipments catapulting in 2026, with their share at Nvidia climbing as high as 40%. This change is expected to push Samsung's market capitalization to exceed 1 quadrillion Korean won, as the company turns a multi-year HBM supply disadvantage into a premium advantage and rides DRAM price uptrends.

Samsung's chip division is effectively gearing up for a powerful comeback, riding the tailwinds of rapidly improving chip pricing and stellar demand for next-generation memory units. This could rewrite the playbook for memory suppliers globally, with Samsung positioned as a serious contender for supremacy in high-performance memory markets.