Samsung warns chip shortage will worsen through 2028

Samsung Electronics told investors on Thursday that global memory chip shortages will deepen in 2027 and persist into 2028, as relentless demand for AI infrastructure outstrips the industry's ability to expand production. The warning came alongside record quarterly results that underscored the extraordinary profitability of the current chip upcycle.

Record Profits, Stark Warning

Samsung's semiconductor division posted an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter of 2026, up more than 250-fold from a year earlier, driven by surging prices for memory chips used in AI servers. Company-wide operating profit reached 89.5 trillion won on revenue of 171.5 trillion won, a 130% year-on-year increase.tbsnews+2

"The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028," Jaejune Kim, executive vice president of Samsung's memory business, told analysts on the earnings call. Kim said unmet demand this year is rolling into next year, compounding future constraints, and noted that new fabrication plants take more than three years from groundbreaking to wafer production, making rapid supply expansion impossible.sedaily+2

Long-Term Deals Lock In Demand

Samsung disclosed it has signed long-term supply agreements with the world's five largest data center companies and is close to finalizing contracts with five additional firms. The deals last at least five years, cover 60% to 70% of Samsung's total capacity, include upfront payments, and contain floor pricing to protect capital investments. The Associated Press reported the five largest customers could include Amazon Web Services, Google, Meta, Oracle, and Microsoft ↗ 0.52%.finance.yahoo+2

Samsung, which counts Nvidia ↘ 1.47% and AMD Advanced Micro Devices, Inc. ↘ 1.47% among its high-bandwidth memory customers, said it expects HBM4 revenue to more than triple in the third quarter, narrowing the gap between its HBM market share and its overall DRAM share.tbsnews+1

Market Reaction and Broader Context

Samsung shares surged as much as 8% following the earnings call, and the KOSPI rebounded more than 5% after opening lower on concerns about the U.S. Federal Reserve's decision to hold rates steady. Rival SK Hynix ↘ 3.12%, which reported its own record results a day earlier but disappointed investors with a vague outlook, also recovered intraday losses.biz.chosun+1

The bullish tone contrasted with months of selling pressure on chip stocks amid fears that AI spending could slow and Chinese competition could erode margins. Yet rising chip costs are creating internal strain: Samsung's mobile division posted a 700 billion won loss, its first quarterly deficit, as component expenses climbed.thestar+1

"The chips enriching one side of Samsung are now hurting the other, leaving the group more exposed than ever to memory pricing and the durability of hyperscaler demand," said Josh Gilbert, an analyst at eToro.tbsnews