Samsung Electronics: Samsung returns to profit growth as AI memory sales surge

Samsung Electronics is now an approved supplier of HBM3E memory for Nvidia, a strategic breakthrough after lagging in AI memory. This signals restored trust and creates a pipeline to supply next-generation HBM4, directly tying Samsung’s fortunes to the fastest growing AI markets and strengthening its role in the global semiconductor supply chain.

Jun Young-hyun, Samsung Electronics' new Co-CEO, brings deep semiconductor and turnaround experience. He led Samsung’s memory business through rapid global expansion (2014–2017), then ran Samsung SDI, restoring profitability after battery setbacks. Known for direct cost control, engineering-led fixes, and decisive restructuring, Jun has earned industry respect for delivering results under pressure.

Samsung Electronics is trading well below analyst estimates of fair value, even as memory and AI chip demand surge across industries. A sustained cycle upturn, or a clear fix to its HBM supply issue, could drive a significant re-rating as investors rotate back into quality semiconductor leaders.

Nvidia HBM3E Qualification Success: Samsung Electronics passed Nvidia’s qualification tests for its 12-layer HBM3E memory after repeated setbacks. Near-term shipments are limited but this win restores technical credibility and enables supply into Nvidia’s AI accelerators, watch for further client wins and order scale-up in quarterly calls.

• HBM4 Early Sampling and Upscaling: Samsung is now fast-tracking development and qualification of next-gen HBM4 memory. Early samples for Nvidia are expected late 2025, with full production aligned to major AI chip launches in 2026. This could reset market share and restore segment leadership if performance is sustained.

• Further Memory Pricing and Buybacks: The company sold out its 2026 HBM supply and is reportedly considering aggressive buybacks alongside tighter capital allocation. Both memory price hikes and buybacks would directly improve earnings power and support valuation re-rating by next year.

AI and Data Center Megatrend: AI demand is driving a secular shift for high-bandwidth memory, with order volumes set to grow annually as AI chips proliferate in cloud, enterprise, and industry verticals. Samsung is positioned to benefit if it keeps pace in HBM innovation and client relationships.

Samsung Electronics still lags SK Hynix and Micron in qualifying high-bandwidth memory (HBM) with major customers. If it cannot regain technical credibility and win Nvidia as a client, memory margins may stay depressed.

Chinese handset makers are winning share at the mid and low end, making pricing tough for Samsung. Weakness in mobile means less profit diversification if memory segment also stumbles, keeping returns volatile.

Samsung’s second major slip (Note 7, now HBM) in under a decade shows that scale doesn’t guarantee flawless operations. If management’s turnaround falters, shares could go from cheap to value trap as margins flatline.