Following TSMC, Samsung Market Value Joins Trillion-Dollar Club as Memory Chips Support Half the Business
Samsung Electronics' market capitalization surpassed $1.15 trillion, joining the trillion-dollar club, driven by strong AI chip demand and a threefold increase in its share price over the past year. The company's memory business, fueled by AI data center orders and high profit margins, is expected to drive continued profitability, with projected demand strength and widening supply-demand gaps for memory chips. Preliminary discussions with Apple for alternative foundry options have also influenced market sentiment, with Intel shares surging on the news. However, Samsung faces potential internal risks including a looming labor strike that could significantly disrupt production and lead to long-term losses.
TradingKey - Driven by the robust pull of explosive demand for AI chips, global memory chip leader Samsung Electronics reached a development milestone. On May 6, the company's stock price surged as much as 16% intraday to 270,000 KRW before closing up 14.41%, with its market capitalization surpassing 1.7 quadrillion KRW (approximately $1.15 trillion). Samsung has officially joined the trillion-dollar club, becoming the second Asian tech firm after TSMC ( TSM) to achieve this feat.
Over the past year, alongside the explosive growth in global demand for AI chips, the stock price of Samsung Electronics, the world's largest memory chip manufacturer, has surged more than threefold, with its year-to-date gain reaching 125%.
Dave Mazza, CEO of Roundhill Investments in New York, stated: "The significance of the trillion-dollar market cap threshold is more than just symbolic; it carries substantial weight. From a broader perspective, this reflects the market's assessment that the role of memory chips in the artificial intelligence (AI) infrastructure ecosystem is structural rather than cyclical."
Recent reports suggest that Apple ( AAPL) is in preliminary discussions with Intel ( INTC) and Samsung, planning to include these two companies as alternative foundries for its core device chips. This move aims to reduce reliance on a single regional supply chain and alleviate current chip shortage pressures.
Apple executives also made a special trip to inspect Samsung's advanced chip factory under construction in Texas. However, cooperation remains in the preliminary exploration phase, and no substantive orders have been signed yet. Apple still has reservations regarding non-TSMC chip manufacturing technologies, and it remains uncertain whether the company will ultimately introduce new foundry partners.
Driven by this news, Intel shares surged 13% in overnight U.S. trading, and memory sector stocks rose collectively, which also fueled Wednesday's rally in Samsung shares.
Samsung’s memory business expected to drive sustained earnings growth.
Just days ago, Samsung Electronics reported robust financial results. Its memory business was the undisputed core driver of its first-quarter performance, with the semiconductor division generating 81.7 trillion won in revenue, up 86% quarter-on-quarter. This marked the first time the semiconductor division's revenue accounted for more than 50% of the group's total revenue. Benefiting from high profit margins driven by AI data center orders, operating profit in its chip business surged 48-fold year-on-year, far exceeding market expectations.
Shortages of memory chips, rising prices, and product mix upgrades brought about by the expansion of AI data centers have collectively pushed up profit margins. Samsung Electronics expects server memory demand to remain strong in the second half of the year, with AI agents accelerating demand growth, and plans to deliver HBM4E samples in the second quarter.
The company also stated that the chip supply shortage will persist through the second half of the year, and the memory supply-demand gap may widen further in 2027. Samsung previously announced that its 2026 HBM4 capacity is already fully sold out. Analysts expect the division to maintain its record-breaking earnings momentum over the coming quarters as contract prices continue to soar.
"If investors do their research on Samsung Electronics, we believe they will conclude that the investment opportunity remains highly attractive, even if they missed its previous performance," said Sam Konrad, investment manager at Jupiter Asset Management.
Konrad noted, "The current memory market is in a state of undersupply, and with Samsung indicating that supply and demand in 2027 will be even tighter than in 2026, prices for NAND and DRAM are likely to continue rising."
Samsung Strike Crisis
Although the chip business has demonstrated strong earnings momentum driven by the AI wave, Samsung's internal growth structure is facing risks of imbalance, particularly as the Mobile and Display divisions see their profit margins significantly suppressed by rising raw material and supply chain costs.
Profits from the AI boom have also prompted Samsung employees to demand higher compensation and bonuses, with workers threatening an 18-day full-scale strike later this month.
Notably, even in a highly automated production environment, labor shortages remain an unbearable weight for production lines. The previous large-scale strike involving approximately 40,000 Samsung workers served as a wake-up call for the industry, as memory and foundry wafer production plummeted by 18.4% and 58.1%, respectively.
A deeper crisis lies in the operational characteristics of semiconductor equipment; if routine maintenance is stalled for a long period due to a strike, the time cost required for a subsequent restart is typically double the duration of the shutdown. This means that if the union carries out the 18-day strike, it could take Samsung over a month to barely recover normal production momentum, and such "long-tail losses" in output would bring significant uncertainty to the global electronics supply chain.
Faced with the looming strike threat and potential future operational disruptions, Samsung Electronics management is attempting to reshape the group's compensation logic by spinning off the semiconductor division, seeking to fundamentally decouple the profit distribution issue at the organizational level. However, while divesting the most profitable semiconductor division could resolve internal disputes over wage inequality, it could easily trigger a collapse in the company's overall valuation and downward pressure on its stock price, inevitably sparking a strong backlash and resistance from shareholders.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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