Growing demand for AI computing is keeping chip supply short for the foreseeable future, and Samsung is coming out on top.
The world’s largest semiconductor maker is reaping the rewards of a global shortage of memory chips driven by demand for AI so rapacious it’s making everyone unhappy.
Samsung said in its latest earnings report that it posted record profits, up nearly 500% from the same period last year, to $31.72 billion. That figure was boosted by a nearly 50-fold increase in revenue from its chip business.
The company has sold all of its memory production capacity for the rest of the year and says shortages, which are driving up prices of everything from laptops has smart phones has external storage devices has game consoleswill get worse in 2027. In all likelihood, this will continue to increase the prices of technological devices and will begin to affect the purchasing behavior of millions of consumers.
In an investor call for its earnings report, one of the company’s memory chip executives, Kim Jaejune, said: “Based solely on the demand currently received for 2027, the gap between supply and demand for 2027 is expected to widen even more than in 2026.”
Long-term memory loss
Memory prices started to rise significantly last year data center boom AI support companies have gobbled up vast reserves of memory used to power the hardware that processes all their data. This led to global shortages and price hikes that are still being felt and which Samsung says will not abate anytime soon.
Samsung is trying to meet demand from companies, including Nvidia, while competing with those same companies, which also produce their own semiconductors. Apple, Microsoft and Alphabet are among the world’s leading memory manufacturers, but they are also customers of Samsung and cannot produce the amount of memory required to meet their growing needs themselves.
What the company’s chip executives are saying about a prolonged memory shortage is consistent with what analysts, other companies and data on chip production capacity are already confirming, said Mahdi Eslamimehr, executive vice president of Quandary Peak Research and a former Samsung executive.
“It will still take years to create new manufacturing capacity, and existing lines are being repurposed for HBM (high-bandwidth memory) and enterprise DDR5, which structurally reduces the supply of raw materials,” Eslamimehr said.
Samsung’s profits, he added, “reflect a true AI-driven supercycle rather than a fleeting spike.”
To make matters worse, he said, Samsung has binding multi-year contracts with some of its customers that help secure its revenue but also leave very little flexibility for non-AI memory production.
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Meanwhile, for people buying tech products, phones and PCs will continue to get more expensive with no relief in sight. This means people can keep their devices longer before replacing them, delay new purchases, and opt for less expensive, less powerful technology if they are price sensitive.
“While Samsung and its AI customers thrive, everyday consumers will pay more for phones, laptops, SSDs and gaming hardware, with the pain most acute in the budget and mid-range segments that drive the volume,” Eslamimehr said.
