Samsung Electronics posted a record high operating profit in the fourth quarter of 2025, more than tripling from the previous year. The company benefitted from the strong demand for memory chips driven by the booming artificial intelligence (AI) sector. However, despite this impressive performance, Samsung warned of significant challenges ahead, particularly within its smartphone and display businesses, as the rising cost of memory chips creates headwinds.
A Strong Quarter for Samsung’s Chip Business
For the October to December period, Samsung reported 20 trillion won ($13.98 billion) in operating profit, surpassing expectations and up significantly from 6.49 trillion won a year earlier. The company’s revenue also surged by 24%, reaching 93.8 trillion won.
The bulk of this growth came from Samsung’s memory chip business, which posted a 470% year-over-year profit increase to 16.4 trillion won in the fourth quarter. This segment now accounts for over 80% of Samsung’s total profit, underlining the importance of its semiconductor division. High demand for high-bandwidth memory (HBM) chips, particularly for AI servers and Nvidia’s GPUs, fueled much of the growth in this segment.
Impact on Mobile and Display Businesses
Despite the overall success, Samsung faced cost pressures in its mobile and display sectors due to the rising prices of memory chips. Samsung’s mobile division saw a 10% decline in operating profit, dropping to 1.9 trillion won, as the surge in chip prices squeezed margins. The company acknowledged a “challenging year” ahead for its mobile and display businesses, and plans to work closely with partners to ensure a stable supply of components and mitigate profit erosion.
Samsung co-CEO TM Roh described the current chip shortage as “unprecedented” and suggested that the company might need to raise prices to protect its margins. Analysts are closely watching how Samsung will navigate these challenges, with some expecting the company’s profits to surge in the current quarter, despite the mounting pressure on its smartphone division.
The display business, which had strong results in the fourth quarter, also warned that smartphone demand could weaken in the first quarter of 2026. This forecast is partly due to rising chip prices and increased pressure from customers to negotiate price cuts.
Samsung’s Ambitious Plans for HBM4
In an effort to stay ahead of rivals like SK Hynix, Samsung is pushing forward with its next-generation HBM4 chips, which it plans to ship in February 2026, primarily to a “major customer”—likely referring to Nvidia. Samsung has secured orders for all of its HBM capacity this year, with HBM revenue expected to more than triple in 2026. However, the competition in the HBM market is intensifying, as SK Hynix has significantly ramped up its production of HBM4 to meet demand from customers like Nvidia.
The race to build AI infrastructure has led chipmakers to prioritize high-bandwidth memory for AI servers, putting further strain on the supply of conventional memory chips. This shift has enabled companies like Samsung and SK Hynix to raise prices aggressively, given the strong demand and limited supply.
Samsung’s Strategy Amidst Rising Costs
Samsung executives have emphasized that while the surge in memory prices has been beneficial for the company’s chip business, it has also placed significant pressure on its smartphone and display sectors. The company is focused on maintaining profitability through higher-margin products like HBM and AI chips, but the competition remains fierce. As SK Hynix continues to assert dominance in the HBM4 market, Samsung is working to improve its position and meet the growing demand for AI-related memory products.
A Strong Future for Memory, but Challenges in Mobile
While Samsung’s memory chip business continues to thrive, the company faces significant hurdles in its mobile and display divisions, as rising chip prices strain margins. The AI boom has created massive demand for high-bandwidth memory, giving Samsung a significant opportunity, but it must navigate the growing competition from SK Hynix and manage the rising costs in its other divisions. How Samsung adapts
