Powered by exploding demand for artificial intelligence (AI), Samsung Electronics posted its largest quarterly results ever. Diagnosing that the memory market has moved beyond a short-term boom into a phase where demand structurally overwhelms supply, Samsung Electronics projected that the supply shortage will worsen in 2027 compared with this year.
At its first-quarter 2026 earnings conference call on the 30th, Samsung Electronics announced finalized results of 133.8734 trillion won in sales and 57.2328 trillion won in operating profit on a consolidation basis. Quarter over quarter, sales jumped 43% and operating profit surged 185%.
The primary driver of results was the semiconductor (DS) institutional sector. The DS institutional sector set new records with 81.7 trillion won in sales and 53.7 trillion won in operating profit. Samsung Electronics said, "Server DRAM and SSD demand surged on the back of AI infrastructure expansion and early demand for agentic AI," adding, "An increase in sales of high value-added products and higher prices drove the improvement in results."
It is also accelerating efforts to secure leadership in next-generation memory. Starting in the second quarter of this year, Samsung Electronics plans to supply samples of its seventh-generation high-bandwidth memory, "HBM4E," to major customers. In particular, Samsung Electronics emphasized, "Some customers are securing volumes through 2027 in advance, and based on orders received so far, supply and demand in 2027 will be tighter than this year."
Accordingly, it will shift its supply strategy to focus on "long-term agreements (LTA)." Through LTAs, which are more binding than before, the company aims to increase visibility for investment and capacity (CAPEX) operations. It is known that contracts with some customers have already been signed.
System semiconductors and the foundry business will also be reorganized around AI. While expediting development of the next-generation mobile AP "Exynos 2700," the foundry will focus on meeting demand for the 2-nanometer process and base dies for HBM4. Targeting expansion of the silicon photonics market, it is developing a "whole-package" technology that combines advanced processes with 3D Packaging, and plans to begin mass production of optical communication modules in the second half of 2026.
In contrast, mature (legacy) nodes with low profitability will undergo bold restructuring. The 8-inch PMIC and DDI lines will be phased out, and some products such as DDI and CIS will shift to the 17-nanometer process to rebuild the portfolio around high value-added specialty products.
Facility investment will maintain an expansionary stance. After investing 11.2 trillion won in the first quarter, full-year CAPEX is expected to increase significantly from the prior year. Based on fab infrastructure in Pyeongtaek and Taylor, the company will ramp up equipment investments to meet AI demand. As a new growth engine, it has set its sights on the data center cooling market and, leveraging recently acquired "Flakt," will target the global cooling market—expected to grow an average of 24% annually through 2030.
Meanwhile, the set (mobile and TV) and home appliance businesses plan to offset cost pressures from higher memory prices and geopolitical risks by improving the mix with premium products. Regarding the recent labor-management conflict, the company said, "A dedicated team is responding to prevent any production disruptions, and we will resolve the issue amicably through dialogue with the union."