Samsung Warns AI Chip Shortages Will Worsen in 2027 as Profits Hit Record High

Samsung Electronics has warned AI chip shortages might intensify in 2027, with demand for advanced memory likely to outstrip the industry’s ability to boost supply. The warning came on Thursday, October 29, when the South Korean IT giant disclosed its full third-quarter financial data. 

The results included record profits from its semiconductor sector, fuelled by a surge in demand for memory chips used in AI servers and data centres. Samsung anticipates AI infrastructure spending to hit fresh heights next year and memory demand to outpace supply by an even bigger margin than in 2026. 

The company is boosting output of its advanced memory products and spending on new manufacturing plants, but it expects supply bottlenecks to persist.

Samsung Expects AI Memory Shortages to Worsen in 2027

Samsung’s latest guidance indicates the semiconductor sector will find it difficult to provide enough advanced memory to support AI infrastructure projects next year. The company expects ongoing investment in AI servers and computing systems to fuel demand for high-bandwidth memory (HBM) as well as server DRAM and solid-state drives (SSDs). T

hese products handle the data storage and movement required to operate AI workloads. So what’s so essential about HBM? It allows AI processors to read massive volumes of data quickly. While firms are rolling out more powerful systems, they're also buying more of the specialist memory required to keep those processors operating. 

New central processing unit (CPU) and graphics processing unit (GPU) platforms will support demand in the fourth quarter of 2026, Samsung stated. It also anticipates demand for high-capacity SSDs to grow as personal AI agent services expand. 

The business said it would focus on products needed in AI applications, including high-bandwidth memory, or HBM, high-speed DDR5 server memory and quad-level cell, or QLC, SSDs that can store more data in the same physical space. Samsung also disclosed during its results call that its HBM supply for 2027 was already sold out, with clients wanting more volume. 

Tight supply conditions could continue into 2028 as manufacturers try to increase production capacity, the business said.

Samsung Reports Record Semiconductor Profits

The warning came as Samsung posted its best quarterly financial performance on record, with its semiconductor business accounting for nearly all of the company’s operating profit. Samsung said it earned 107.4 trillion won in operating profit and 195.3 trillion won in consolidated sales for the three months ended September 30, 2026. 

Revenue was up 14 per cent from the prior quarter and operating profit jumped 20 per cent. Headline earnings numbers were already announced in preliminary guidance on 8 October. Thursday’s comprehensive results shed more light on the semiconductor business’s performance and Samsung’s outlook for the coming year. 

Its Device Solutions segment, which includes the semiconductor business, reported revenue of 147.1 trillion won and operating profit of 106.5 trillion won. That’s around 99 per cent of Samsung’s entire operating profit for the quarter. Samsung said the results were underpinned by robust demand for memory products, higher prices in the market and a focus on chips used in artificial intelligence systems. 

The company’s memory operations also posted their best quarterly revenue and operating profit ever. Samsung said it had ramped up sales of its sixth-generation HBM4 chips significantly while responding to surging demand for server SSDs. 

The company said this was due to robust server demand and rising memory prices across the board for diverse applications. Production restrictions also pushed the company to focus on more advanced, higher-value products.

Samsung Expands AI Chip Production and Long-Term Supply Agreements

Samsung is ramping up capital expenditure for chip production as it gets ready for sustained demand from AI and high-performance computing customers. The company’s capital expenditure in the third quarter was 29 trillion won, including 27.2 trillion won in its Device Solutions segment. 

For the full year, Samsung forecasts capital expenditure to be about 84.4 trillion won, with 76.8 trillion won earmarked for semiconductors. The investment will comprise new fabrication plants and accompanying infrastructure to expand production capacity over the medium and long term. Samsung also intends to launch its new semiconductor manufacturing plant in Taylor, Texas, in 2027. 

The company said the facility would bolster its production capabilities as demand grows for advanced chips used in AI and high-performance computing. Samsung is also seeking multi-year supply deals with clients to lock in longer-term demand for its memory products, in addition to its production investments. 

The company announced on its earnings call that it has struck long-term deals with 10 large clients and is in discussions with another 10. These contracts are aimed at providing more certainty to Samsung’s production plans and to the future memory requirements of its clients. But building up semiconductor production isn't something that happens overnight. 

New facilities have to be constructed, outfitted and readied for production before they can put chips on the market.

Rising Memory Prices Put Pressure on Samsung's Device Business

Samsung’s semiconductor business saw increased demand and higher memory prices, while other parts of the company had a harder quarter. Operating loss at its Device eXperience unit, which covers smartphones, televisions and home appliances, was 0.8 trillion won, while revenue rose 8 per cent from the previous quarter. 

The total operating loss of the Mobile eXperience and Networks businesses was 0.6 trillion won. Profitability had dipped from the same period last year due to cost pressures, while new flagship smartphone launches had helped lift sales, Samsung said. Its TV and digital appliance businesses also recorded a combined operating loss of 0.2 trillion won as rising costs weighed on profitability. 

Samsung has said it'll drive profitability in its consumer divisions through premium products and operational efficiency. But the company is ready for another year of high AI-related demand in its semiconductor operations. Its current forecast shows that even with further investment, the supply of advanced memory chips may still fall short of customers’ demand through 2027.