Inside Samsung’s semiconductor recovery: How AI demand reversed four quarters of decline

Samsung’s semiconductor restoration has materialised through the third quarter of 2025, with the South Korean tech big posting an working revenue of KRW 12.2 trillion (US$8.6 billion) – greater than double the earlier quarter and ending a streak of four consecutive quarterly declines in its chip division.

The turnaround centred on Samsung’s Device Solutions division, which reported KRW 33.1 trillion in income and KRW 7.0 trillion in working revenue, an over tenfold improve from the June quarter.

The Memory Business achieved what Samsung described as “record-high quarterly income,” pushed by expanded gross sales of high-bandwidth reminiscence (HBM3E) chips and server solid-state drives – each necessary parts for synthetic intelligence infrastructure.

But this wasn’t merely a narrative of rising tides lifting all boats. Samsung’s semiconductor restoration displays calculated strategic pivots made throughout its downturn, market dynamics that lastly shifted in its favour, and intense aggressive pressures that compelled the corporate to speed up its AI chip roadmap.

The highway again from the droop

Samsung’s journey to this quarter’s efficiency started in a special place. Throughout 2024 and into early 2025, the corporate confronted a number of headwinds: a brutal reminiscence chip glut that collapsed costs, delayed qualification of its HBM merchandise with key clients, and the corporate seeing rival SK Hynix seize early management in AI reminiscence chips.

The low level got here within the second quarter of 2025, when Samsung’s chip division reported working revenue that had analysts questioning whether or not the corporate had misplaced its technological edge. SK Hynix had seized the highest spot within the reminiscence marketplace for the primary time, fueled by its early success supplying HBM chips to Nvidia’s AI accelerators.

MS Hwang, analysis director at Counterpoint Research, contextualised Samsung’s third-quarter efficiency as “a transparent end result of a broader reminiscence market increase and rising costs for general-purpose reminiscence.”

But Hwang’s agency additionally famous that Samsung had reclaimed the highest spot within the reminiscence market from SK Hynix throughout Q3, suggesting the semiconductor restoration concerned extra than simply beneficial market circumstances.

HBM: From laggard to mass manufacturing

Samsung’s capability to reverse its HBM fortunes proved central to the turnaround. The firm confirmed that HBM3E is now “in mass manufacturing and being offered to all associated clients,” whereas HBM4 samples are “concurrently being shipped to key purchasers.”

Reports emerged in late September that Samsung had handed Nvidia’s qualification assessments for superior high-bandwidth reminiscence chips – a necessary milestone that had eluded the corporate for months. While Samsung hasn’t confirmed the Nvidia qualification publicly, the timing aligns with the acceleration in HBM gross sales mirrored in Q3 outcomes.

During the corporate’s earnings name, a Samsung govt outlined the demand atmosphere: “We count on information centre firms to repeatedly broaden their {hardware} funding as a result of of the continued competitors to safe AI infrastructure. Therefore, our AI-related server demand retains rising, and this demand considerably exceeds business provide.”

That supply-demand imbalance has created pricing energy that Samsung lacked throughout its declining quarters. The firm particularly cited “a beneficial value atmosphere” and “notably decreased one-off prices like stock worth changes” as contributors to increased earnings.

Beyond reminiscence: Foundry progress and challenges

Samsung’s semiconductor restoration prolonged past reminiscence chips. The Foundry Business, which manufactures chips designed by different firms, “posted a big enchancment in earnings in Q3 2025, stemming from a discount in one-off prices and higher fab use.” The division additionally achieved “record-high buyer orders, primarily on superior nodes.”

The foundry enterprise is ramping up mass manufacturing of 2-nanometer Gate-All-Around (GAA) merchandise, an necessary expertise that helps preserve competitiveness towards TSMC, the corporate that dominates the foundry market. Samsung indicated it might start operations at its fab in Taylor, Texas, “in a well timed method” in 2026.

However, the System LSI Business, which designs Samsung’s Exynos processors and picture sensors, noticed earnings stall “on account of seasonality and buyer stock changes.”

What this implies for 2026

Samsung’s steerage for the approaching yr displays confidence that the semiconductor restoration has endurance. The Memory Business will “give attention to the mass manufacturing of HBM4 merchandise with differentiated efficiency” whereas aiming to “scale out the HBM gross sales base.”

The firm plans capability growth in its 1c manufacturing course of to fulfill projected HBM4 demand will increase. Consolidated income for the quarter reached KRW 86.1 trillion, a 15.4% improve from the earlier quarter and eight.85% increased year-over-year. The Device eXperience division, which incorporates smartphones, contributed KRW 34.1 trillion in income, supported by the Galaxy Z Fold7 launch and robust flagship gross sales.

Yet challenges persist. Samsung Display reported stable efficiency with KRW 8.1 trillion in income and KRW 1.2 trillion in working revenue, however the Visual Display enterprise recorded an working loss of KRW 0.1 trillion regardless of “stable gross sales development of premium merchandise,” citing “intensified competitors.”

The semiconductor restoration that Samsung achieved in Q3 2025 resolves the instant disaster that threatened its market place. Whether the corporate can maintain this momentum whereas navigating intense competitors from SK Hynix in HBM, TSMC in foundry, and rising geopolitical pressures on the chip business will decide if this quarter marked a real turning level or merely a reprieve.

For now, Samsung has demonstrated that even after four quarters of decline, strategic execution and market timing can nonetheless produce a comeback.

(Photo by Babak Habibi)

See additionally: Samsung AI strategy delivers record revenue despite semiconductor headwinds

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