Samsung’s record profit meets chip market rout

Samsung Electronics posted a record second-quarter operating profit, with earnings far exceeding the prior year as demand for AI-related hardware intensified. The company reported operating profit of 89.5 trillion won on revenue of 171.5 trillion won, with operating profit up 1,814% year on year and revenue rising 130%. Its semiconductor arm alone generated operating income of 89.2 trillion won in the June quarter, while group-wide net income reached 71.3 trillion won, both beating analyst estimates.

Management identified AI server demand as the key driver of this performance, particularly through the memory division. The company said AI’s reliance on memory produced hefty margins as demand outstripped supply for advanced products, helping deliver record-breaking memory earnings.

Samsung highlighted strong sales of high-bandwidth memory, stating it scaled up HBM4 deliveries and shipped the industry’s first HBM4E samples to major customers. It also reported all-time high sales for both DRAM and NAND memory during the quarter, underscoring how AI workloads are lifting demand across multiple product lines.

Looking ahead to the second half of 2026, the company expects robust demand for memory centered on servers and continuing capital expenditure on AI infrastructure. It framed server-focused memory as a key growth area as broader adoption of agentic AI and other advanced applications drives the need for higher-performance chips.

Despite the strong quarterly results, technology and semiconductor stocks in Asia and Europe extended a sell-off in sessions around July 29–30. The world’s most valuable chipmakers collectively saw more than $1 trillion wiped from their market capitalizations since the close of trading on the preceding Friday. Key memory players including SK Hynix, Samsung Electronics and Micron all lost large amounts of market value.

Samsung Electronics’ shares fell more than 5% in one session during this period, even though the company had just reported much higher net income. In South Korea, the benchmark Kospi slipped further as investor jitters persisted, showing that record earnings from a major index constituent were not enough to offset broader risk-off sentiment toward the chip sector.

South Korean authorities responded to the market volatility by moving to curb demand for leveraged single-stock exchange-traded funds. Officials held emergency meetings and pledged further measures aimed at stabilizing the market after the rout. Regulators signaled plans for caps on individual investment in these products and tighter access for retail investors.

One key measure involves increasing the minimum cash requirement for such leveraged single-stock ETFs, with a planned rise in the minimum cash deposit to 30 million won. These steps are intended to reduce excessive leverage and forced selling pressure tied to these instruments, adding a regulatory dimension to the market’s adjustment following the sharp moves in semiconductor shares.