Samsung Projects Operating Profit of $66 Billion by 2026

Samsung Electronics is poised for significant growth, with projections indicating that its operating profit could reach $66 billion by 2026, more than doubling from the previous year. This forecast, released on November 26, 2023, by KB Investment & Securities, highlights the surge in global demand for memory chips as a key driver of this anticipated profit increase.

In the first nine months of 2023, Samsung recorded an operating income of $16 billion. KB Investment estimates that the company’s fourth-quarter earnings will exceed $13 billion alone, with its semiconductor division expected to represent nearly 80% of overall earnings for the October-December period.

Rising Demand and Strategic Developments

The report from KB Investment emphasizes the impact of rising prices in the memory chip market, which have increased by over 50% this month. According to Kim Dong-won, head of research at KB Investment, Samsung is on track to achieve a record operating profit close to $14 billion in the fourth quarter. He also noted that the company is likely to receive quality certification for its high-bandwidth memory, HBM4, sooner than expected, within this year.

Samsung has historically lagged behind local competitor SK hynix in the lucrative HBM sector, which plays a crucial role in artificial intelligence and supercomputing applications. However, recent developments suggest that Samsung is narrowing this gap, having commenced production of HBM3E. During a conference call last month, the company confirmed that Nvidia is currently testing the next-generation HBM4 for a potential partnership.

Implications for Shareholder Value

In light of the projected profit increase, Kim anticipates that Samsung may allocate a portion of its operating profit towards share buybacks, aiming to enhance stock value by canceling shares. Following the announcement, Samsung’s share price saw a notable rise of 3.52% on the Seoul stock exchange.

Samsung’s diverse portfolio, which includes not only semiconductors but also smartphones, flat-panel displays, and home appliances, continues to position the company as a leader in the technology sector. The anticipated growth in operating profit reflects the company’s ability to adapt to market demands and innovate in a competitive landscape.