Samsung Electronics stunned markets on Thursday with news that its chip division’s profit had surged more than 250-fold. Alongside the results, the company revealed fresh multi-year supply agreements with major data center operators. It also warned that global chip shortages are likely to worsen and could persist well into 2028. That bold forecast, however, was not enough to calm investor nerves. Concerns remain high over the enormous sums tech firms are pouring into AI infrastructure. Samsung’s shares rose as much as 8.4 percent during trading before closing 0.7 percent lower. Even with that dip, the stock outperformed rival SK Hynix, which closed down a sharper 5.6 percent the same day. Kim Seok-hwan, a market analyst at Mirae Asset Securities, said sentiment around chipmakers has shifted. Investors, he noted, are increasingly unsure how long today’s unusually high profit margins can be maintained. This comes right after Samsung’s chip business posted a record-breaking 70 percent operating profit margin. Samsung revealed it has already struck supply agreements with the five biggest data center companies globally. The firm added that it is close to finalizing deals with five more major players, though it did not name them. Jaejune Kim, executive vice president of Samsung’s memory division, told analysts that nearly every client is now asking for long-term, multi-year contracts instead of short-term arrangements. According to Kim, Samsung wants roughly two-thirds of its memory output locked into long-term supply deals. This approach echoes similar moves by SK Hynix, both aiming to shield themselves from the industry’s usual boom-and-bust swings. These new contracts generally span at least five years and often include upfront payments along with guaranteed floor prices, helping companies manage the financial risk tied to heavy capital spending. This announcement follows several rough months for chip stocks, driven largely by investor unease over ballooning AI infrastructure costs and rising competitive pressure from Chinese chipmakers. Both factors have raised doubts about how sustainable current earnings levels really are. Adding to that unease, Meta Platforms disclosed a steep 91 percent drop in its second-quarter free cash flow on Wednesday. That followed an even more striking development from Alphabet the week before, which reported its first-ever quarter with negative cash flow. Together, these results have intensified questions across the industry about whether the current pace of AI spending can hold up much longer without straining company finances.
