Samsung Reports Record Profits as AI Chip Sell-off Hits Global Markets

Driven by a global shortage of memory chips for AI infrastructure, Samsung Electronics reported a record preliminary second-quarter operating profit of 89.4 trillion won ($58.4 billion). This figure represents a roughly 19-fold increase year-over-year, surpassing previous quarterly records held by Nvidia and Apple. The surge was fueled by unprecedented demand for high-bandwidth memory and DRAM, allowing Samsung to implement aggressive price hikes throughout the first half of 2026.

Despite the historic earnings, Samsung shares plummeted as much as 10% in Seoul on July 7, erasing over $100 billion in market value. This triggered a broader collapse in the South Korean KOSPI index, which fell over 8% and activated multiple circuit breakers. The volatility extended to Wall Street, dragging down the Nasdaq and the Philadelphia Semiconductor Index as investors engaged in profit-taking and expressed concerns over an AI bubble and potential overcapacity.

To sustain this growth, Samsung and SK Hynix are investing hundreds of billions of dollars to expand chip capacity in South Korea, supported by a government plan worth at least $880 billion. Other AI hardware players also saw massive gains, with Hon Hai Precision Industry reporting a 40% jump in second-quarter sales. However, the sector now faces headwinds from reports that Chinese startup DeepSeek is developing its own AI chips to bypass U.S. export bans, adding to the market instability.