AI Boom Delivers Record Profits for Samsung and SK Hynix, But Investor Anxiety Mounts Over Capital Costs and Chinese Competition

A relentless global rush to build artificial intelligence hardware has propelled South Korea’s primary technology giants to historic financial highs, though equity markets remain unsettled by the immense capital expenditure needed to sustain the rally.

Samsung Electronics disclosed an all-time high quarterly operating profit of 89.5 trillion won ($62 billion) for the April to June quarter. The figure represents a more than 19-fold surge compared to the same period last year. Total revenue reached a record 171.5 trillion won ($119 billion), heavily fortified by rising memory chip prices and massive order volumes for advanced High Bandwidth Memory (HBM)—the critical architecture required to feed graphics processors powering large language models and agentic AI systems.

The semiconductor surge buffered Samsung against margin pressures elsewhere in its portfolio, as higher component pricing contributed to an operating loss across its mobile devices, television, and home appliance business units. Company officials projected that structural deficits in server chip supply will persist through the second half of the year as enterprise infrastructure buildouts accelerate.

To capture sustained demand, Samsung is scaling up its international manufacturing footprint. Kim Jaejune, an executive within Samsung’s memory division, confirmed during an earnings call that construction on the company’s second semiconductor fabrication facility in Taylor, Texas, will begin before the end of 2024, with target commercial production slated for 2030. Kim noted that Samsung has already secured long-term supply agreements with five leading global data center operators—commonly understood in the industry to include Amazon Web Services, Google, Meta, Oracle, and Microsoft—and is actively negotiating with additional enterprise clients as supply shortages are projected to widen into 2027.

Samsung’s milestone arrived on the heels of rival SK Hynix reporting record quarterly revenue of 60.5 trillion won ($42 billion). Together, the two South Korean firms control approximately two-thirds of the global memory chip supply. However, SK Hynix fell short of heightened market profit projections, triggering a single-day share price decline of over 9 percent on Wednesday.

The pullback reflects broader equity market turbulence in Seoul, where retail investors hold outsized influence over trading momentum. Beyond immediate profit figures, market participants are weighing the long-term financial drag of massive capital deployments against emerging geopolitical headwinds. Samsung and SK Hynix recently pledged a combined 800 trillion won ($554 billion) toward developing a massive chipmaking manufacturing cluster in southwestern South Korea to reinforce the nation’s position within the global semiconductor supply chain.

The strategic push has been accompanied by high-level diplomatic alignment. Corporate leaders from Samsung, SK Group, and Hyundai joined South Korean President Lee Jae Myung on a mission to San Francisco last week, securing broad preliminary agreements with American artificial intelligence leaders including OpenAI, Anthropic, Nvidia, and Broadcom. According to Kim Yong-beom, chief policy adviser to President Lee, these cross-border pacts illustrate how global technology firms are scrambling to anchor supply guarantees for essential memory components.

Simultaneously, investor sentiment has been rattled by rapid progress within China’s domestic chip industry. Recent reports indicating that a state-backed Chinese enterprise has initiated mass production of domestic deep-ultraviolet (DUV) immersion lithography systems—a critical tool for advanced wafer patterning—have stoked fears of accelerating import substitution. Those anxieties were amplified by the strong public market debut of Chinese memory producer ChangXin Memory Technologies (CXMT).

Son In-joon, a semiconductor analyst at Eugene Securities, noted in a client report that the recent stock price volatility across memory producers demonstrates an analytical shift among institutional investors, who are increasingly prioritizing structural return on capital over short-term cyclical earnings surges.