Business News | Samsung AI Demand Drives Record Chip Earnings Amid Foundry and Mobile Hurdles

Seoul [South Korea], July 30 (ANI): Samsung's AI boom lifts chips, tests foundry and mobile units, according to a news report by The Korea Herald. Samsung Electronics' semiconductor business delivered its strongest-ever second-quarter performance, fueled by booming demand for artificial intelligence server memory that pushed revenue and operating profit to record highs.

However, the recovery remained uneven across the company's broader operations. While the memory business benefited from the AI surge, the foundry operations continued to lag behind Taiwan Semiconductor Manufacturing Co. (TSMC), and the mobile business faced pressure from rising component costs.

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As per the news report, despite the gap, Samsung's foundry business showed signs of improvement during the second quarter. This momentum was driven by stronger demand for AI-related products, including high-bandwidth memory base dies and semiconductors supplied to North American clients. Higher utilisation rates and growing demand for advanced process nodes also contributed to the gain, while major customer projects involving 2-nanometer high-performance computing process technology progressed.

Although Samsung did not disclose standalone foundry revenue or operating profit figures, division officials indicated that profitability could return as demand for advanced semiconductor solutions expands.

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"While it is difficult to specify the exact timing of a turnaround due to the nature of the foundry business, we expect profitability to return in the near future," the news report quoted Samsung's foundry division during an earnings call.

The overall progress represented a gradual recovery after a challenging period marked by low yields and weak utilisation rates in Samsung's 3-nanometer process last year. Nevertheless, closing the gap with market leader TSMC remained a steep task. TSMC controlled over 70 per cent of the global foundry market, while Samsung held a distant second place with a single-digit share.

To differentiate itself from TSMC's primary focus on contract chip manufacturing, Samsung sought to leverage its broader semiconductor ecosystem spanning memory, foundry, and advanced packaging. Industry analysts noted that this integrated approach could become essential as AI chips require closer integration between logic processors, high-bandwidth memory, and packaging technologies.

Highlighting this structural strategy, an industry expert pointed to the distinct position Samsung occupies in the evolving market.

"Samsung's combination of memory, foundry and advanced packaging capabilities could provide a potential advantage as AI chip demand grows," the news report quoted an anonymous securities analyst.

The analyst further noted the key operational benchmarks that the South Korean tech giant must hit before securing a full market turnaround.

"However, improving 2-nanometer yields and securing major customers remain key challenges for a meaningful recovery in the foundry business," the analyst added.

Samsung's mobile business is facing the other side of the semiconductor cycle: the same memory price surge that boosted its chip division has increased smartphone production costs.

The Mobile eXperience and Networks division recorded 33.2 trillion won (USD 23.1 billion) in revenue in the second quarter, up 13.7 per cent from a year earlier, supported by solid sales of the Galaxy S26 and Galaxy A series.

Operating profit, however, fell from a 3.1 trillion won profit a year earlier to a 700 billion won loss, as rising component costs weighed on margins.

Araujo attributed the pressure on profitability to rising mobile memory costs driven by surging AI server demand, which has pushed up component prices.

"The massive demand for AI servers is creating shortages and driving up prices for mobile memory. We already saw this in the second quarter as memory prices rose quarter-on-quarter, leading to pressure on our profitability, and we expect that cost burden to continue through the second half of the year," the news report quoted Daniel Araujo, vice president of the Mobile eXperience and Networks division.

"We are tightening up how we allocate resources across areas like procurement, sales and research and development to minimise the impact on earnings," he added. (ANI)

(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)