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Morning Edition · Thursday, October 8, 2026Published at 1:19 AM EDT · New York
Samsung's preliminary third-quarter operating profit tops 107 trillion won as AI demand lifts memory prices
In Japan, the same data-center spending has started a bidding war for TDK's hard-drive head unit, while a Reuters column argues that AI borrowing now competes with government bonds for investors.
Samsung Electronics reported preliminary third-quarter operating profit above 107 trillion won ($79.8 billion), Kommersant reported, citing Yonhap and the company's preliminary filing. Kommersant called the result a record. The reports differ on the year-on-year comparison. Kommersant's summary put the increase at about 1.8 times the year-earlier figure. Globes described a nearly ninefold jump. The larger figure matches analyst expectations before the release. Hana Securities had forecast about 108 trillion won, up 788% from a year earlier and 21% from the second quarter, according to StockHub. Samsung's profit comes mainly from memory chips used in AI data centers.
Asian stocks still fell on Thursday. Globes also reported a warning from a billionaire investor that AI valuations have formed a bubble.
AI spending is now affecting less visible parts of the hardware supply chain. In Japan, demand from AI data centers has started a bidding war for TDK's magnetic-heads business, The Japan Times reported. The winning bidder would gain in-house capability in the $23 billion hard-drive market. Data centers need large amounts of storage alongside processors, which is why drive makers want to own their component suppliers.
The financing side is shifting as well. In its daily Morning Bid column, Reuters argued that sovereign bonds are losing investor attention as AI-related assets draw capital, while the 10-year Treasury yield trades above 5.3%.
What this means
Suppliers of memory and storage now capture much of the profit from AI capital spending. That money flows to South Korea's export earnings, to Samsung shareholders, and to Japanese component makers such as TDK. Samsung's profit is earned income, but its customers increasingly pay for data centers with debt, and that debt now competes with government bonds yielding above 5%. Investors expect the profit surge. Few have priced how quickly memory prices fall once data-center operators slow orders. The precedent is the 2017-18 memory boom, after which Samsung's operating profit fell by more than half in 2019 as prices dropped. The desk's read is that over the next two quarters more storage and memory suppliers will announce capacity expansions and asset sales, and the risk is a supply overshoot in 2027. That read depends on large data-center operators keeping their spending plans at today's borrowing costs. A cut to capital-spending guidance by a major cloud provider, or a failed bond sale tied to AI, would bring the memory downturn forward.
What to watch
- Samsung's full results later this month and its memory price guidance. A slower price outlook would be the first sign the cycle is peaking.
- The winning bid and the buyer for TDK's magnetic-heads unit. A buyer that makes hard drives would show vertical integration spreading through the storage supply chain.
- New corporate bond sales tied to data centers, and the interest rates they pay. Rising rates on these deals would show AI spending becoming more dependent on credit conditions.
Observations to monitor, not financial advice.
Synthesized from: Kommersant · Globes (Hebrew) · The Japan Times · Investing.com (Reuters Morning Bid) · StockHub (Hana Securities estimate)
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