Samsung Bounces Back: How AI Fuelled a Semiconductor Revival After Four Tough Quarters
In a dramatic turnaround, Samsung has experienced a semiconductor recovery that sent ripples through the tech world. Just recently, during the third quarter of 2025, the South Korean electronics titan clocked an astonishing operating profit of KRW 12.2 trillion (about US$8.6 billion). This figure more than doubled the previous quarter's performance, marking the end of a disappointing streak characterized by four consecutive declines in its chip division.
At the heart of this revival was Samsung's Device Solutions division, which revealed stellar figures: KRW 33.1 trillion in revenue alongside an operating profit of KRW 7.0 trillion, representing a more than tenfold leap from the bleak June results. The Memory Business stood out with what Samsung described as “record-high quarterly revenue.” This significant bump was fueled by heightened sales of high-bandwidth memory (HBM3E) chips and solid-state drives designed for servers—two critical components powering the robust infrastructure behind artificial intelligence (AI).
However, it wasn't just a matter of the market bouncing back. Samsung's semiconductor recovery is more about shrewd strategic repositioning made throughout the downturn, alongside favorable market dynamics that finally tipped in the company’s favor. The pressure from rivals, especially as they advanced in the AI segment, compelled Samsung to expedite its roadmap for AI chips.
From Struggles to Success
The tale of Samsung's resurgence began not so brightly. Starting in 2024 and leading into early 2025, the firm faced tough challenges: a relentless excess of memory chips that drove prices into a nosedive, slower-than-expected qualification of advanced HBM products with crucial clients, and stiff competition as SK Hynix emerged as a frontrunner in the sector.
The nadir of this situation came during the second quarter of 2025, where Samsung's chip division reported profits so low that analysts began speculating about the firm's technological viability. In a shocking turn, SK Hynix captured the lead in the memory market, largely due to its successful supply of HBM chips to Nvidia’s AI accelerators.
Contextualizing Samsung’s recent gains, MS Hwang, research director at Counterpoint Research, pointed out that these improvements stem from a broader uplift in the memory market and rising prices for general-purpose memory. Nonetheless, Hwang noted that Samsung had successfully reclaimed the memory market's top spot from SK Hynix in the third quarter, indicating the recovery was not solely reliant on external conditions.
High-Bandwidth Memory: A Game Changer
Samsung's ability to pivot its approach to high-bandwidth memory proved essential to its turnaround. The company proudly announced that HBM3E is now in mass production and readily available for all related clients, with HBM4 samples simultaneously on route to select customers.
Further good news surfaced in late September when word got out that Samsung cleared Nvidia’s stringent qualification tests for high-bandwidth memory chips—a hurdle that had previously eluded them. While the company hasn’t made any public verification regarding Nvidia, the timing correlates unmistakably with the boost in HBM sales seen in the third quarter results.
During their financial call, a Samsung executive laid out an optimistic outlook, noting, “We expect data center companies to keep ramping up their hardware investments due to ongoing competition in securing AI infrastructure. Therefore, our AI-related server demand is growing significantly, outpacing industry supply.” This mismatch of supply and demand enabled Samsung to regain pricing power, something that had escaped them during their recent downturn.
Beyond Memory: Progress in Foundry and Challenges Ahead
Samsung's semiconductor recovery journey extends beyond memory chips, encompassing growth in its Foundry Business—where chips are produced for other companies—which reported significant earnings improvements in Q3 2025. This success stemmed from reduced one-off costs and enhanced factory utilization. The division garnered record-high orders focused primarily on advanced nodes.
The foundry segment is also primed to ramp up mass production of 2-nanometer Gate-All-Around (GAA) products, a crucial technology for staying competitive against the formidable TSMC, the current frontrunner in this market.
Looking to the Future
Samsung's projections for the coming year demonstrate their optimistic belief in sustained recovery in the semiconductor space. The Memory Business aims to prioritize mass production of HBM4 products with enhanced performance expectations while expanding its HBM sales base.
In the last quarter, consolidated revenue hit KRW 86.1 trillion, a notable 15.4% rise from the previous quarter and 8.85% increase year-on-year. Moreover, the Device eXperience division, featuring products like smartphones, contributed a hefty KRW 34.1 trillion in revenue—thanks to standout launches like the Galaxy Z Fold7.
Yet, the road ahead isn't devoid of obstacles. Despite solid earnings reported by Samsung Display, the Visual Display business recorded a slight operating loss, citing intensified competition as a root cause.
Samsung's recovery during Q3 2025 signifies an end to the immediate crisis that cast doubt on its competitive stance. Nevertheless, whether this performance can be sustained amidst escalating rivalry from SK Hynix in the HBM realm, TSMC in the foundry space, and other geopolitical pressures in the chip industry will ultimately dictate if this was a genuine turning point or a mere momentary respite.
For now, though, Samsung's remarkable journey illustrates the power of strategic foresight and market adaptability in the ever-shifting landscape of technology.
