How Samsung makes its money
Samsung Electronics is South Korea’s largest technology group. It consists of two large divisions. The device division DX builds smartphones, TVs and household appliances. The semiconductor division DS develops memory chips and logic chips. DS also includes the foundry, which manufactures chips under contract for other companies. On top of that come the display subsidiary SDC and the audio subsidiary Harman.
The heart of the group is memory chips. Samsung makes DRAM, the fast working memory for servers and devices. Then there is NAND flash, which stores data permanently. The third building block is HBM, short for High Bandwidth Memory. Here, several memory chips are stacked and placed directly next to the processor. AI accelerators need this memory to process large amounts of data without waiting.
This breadth sets Samsung apart from pure memory makers. The group sells you a Galaxy smartphone and at the same time supplies the chips for the data centers behind it. Whether this breadth is an advantage becomes clear when you look at where the profit comes from.
Why I took a closer look at Samsung
I lived in South Korea in 2024. You come across the Samsung brand on every corner there, from TVs to the group’s high-rise towers. Hardly any company shapes a national stock market as strongly. When Samsung swings, the KOSPI benchmark index swings with it.
That is exactly why a sober check is worthwhile here. In summer 2026, Samsung reported record profits, yet the share price reacted nervously. I split moments like these into two questions. What is the business doing? And what had investors already expected? A record can disappoint if the market had priced in an even bigger record. Without this separation, every headline becomes a trap.
Record profit, but almost entirely from memory
The figures for the second quarter of 2026 show the situation clearly. According to the official quarterly announcement, Samsung generated revenue of KRW 171.5 trillion and operating profit of KRW 89.5 trillion. Both are record highs. The semiconductor division DS contributed KRW 127.5 trillion of the revenue and KRW 89.2 trillion of the operating profit. So almost the entire group profit comes from the chip business, driven by records in DRAM, NAND and HBM.
The other divisions paint a different picture. The smartphone business MX had revenue of KRW 33.2 trillion and an operating loss of KRW 0.7 trillion. The reason is sharply higher costs for components, above all memory chips. TVs and household appliances together reached KRW 14.5 trillion in revenue and a slight loss. The display subsidiary earned KRW 0.7 trillion on revenue of KRW 7.5 trillion.
This is a peculiarity of Samsung stock. By revenue, Samsung is a conglomerate. By profit, it is currently a memory company. High memory prices fill the coffers of the chip division and at the same time weigh on the group’s own device divisions. Anyone valuing the stock is therefore mainly valuing the memory cycle.
The HBM catch-up with SK Hynix
In the AI memory HBM, local rival SK Hynix pulled away from Samsung for a long time. SK Hynix passed Nvidia’s qualification tests earlier and secured the largest orders. For a group that sees itself as number one in the memory market, that was a painful lag.
Since 2026, Samsung has been narrowing the gap. In February 2026, mass production of the new HBM4 generation began. On June 5, 2026, Nvidia CEO Jensen Huang confirmed that Samsung, SK Hynix and Micron had passed certification for the Vera Rubin platform. Analysts estimate SK Hynix’s volume share there at 60% to 70% and Samsung’s at 25% to 30%. In its quarterly announcement, Samsung also reported rising HBM4 sales and the industry’s first samples of the successor HBM4E.
My assessment: Samsung is catching up but is not yet in the lead. Both matter for investors. Every percentage point of market share gained brings high-margin revenue. At the same time, a three-way race between Samsung, SK Hynix and Micron will put long-term pressure on the very prices that are producing record profits today.
Foundry: the costly gap to TSMC
The foundry makes chips to customer order, just like TSMC in Taiwan. Here the gap is much larger than in memory. According to TrendForce data for the first quarter of 2026, TSMC held 72% of the market, Samsung 6.5%. TSMC had revenue of around $35.9 billion, the Samsung foundry about $3.2 billion.
But there is movement. In July 2025, Samsung secured an order from Tesla worth $16.5 billion. By 2033, AI chips of the AI6 type are to be produced at the plant in Taylor, Texas. In the second quarter of 2026, the foundry result improved significantly according to the quarterly announcement, supported by base dies for HBM and new orders on the 2-nanometer process. Even so, the foundry remains a work in progress. It ties up enormous investment and so far does not deliver reliable profit.
Buying Samsung stock: what applies to investors in Germany
The original share is listed on the Seoul stock exchange under the code 005930 and is traded in won. Not every German broker offers this trading venue. The usual route is via GDRs, or Global Depositary Receipts. These are receipts issued by a depositary bank that represent original shares. In Germany, there are GDRs on the ordinary share and on the preferred share (in German), the preferred version without voting rights.
For German residents: with the dividend, you need to keep tax in mind. According to aktien.guide (in German), Samsung pays out four times a year. South Korea withholds 22% withholding tax (in German) on dividends. The double taxation treaty with Germany limits the rate to 15%, which is credited against your German capital gains tax (Abgeltungsteuer). You only get back the 7 percentage points paid in excess by filing an application with the Korean tax authority NTS. Many brokers do not handle this automatically. Factor this effort in before you buy.
The key risks
The memory cycle. The record margin of around 52% in the second quarter of 2026 came about in an undersupplied market. Phases like this attract new capacity. If all manufacturers expand at the same time, prices collapse. Earlier cycles have repeatedly caused the industry’s profits to slump.
High expectations. The share price already reflects a lot of AI hope. If data center operators stretch out their investments, Samsung is hit twice, through volume and price.
HBM competition. SK Hynix continues to lead in HBM4, and Micron is also pushing into the market. If Samsung misses a product generation, the most lucrative orders move away again.
The foundry. The gap to TSMC has been costing money for years. If the leap at 2 nanometers fails, the multi-billion investments will remain without an adequate return.
Governance and location. Samsung is part of a conglomerate structure in which the founding family holds a strong position. Many investors therefore value Korean stocks at a discount, the so-called “Korea discount”. On top of that come currency risk in the won and the geopolitical situation between the US and China.
My conclusion on Samsung stock
Samsung is earning more than ever in the memory boom and has caught up with SK Hynix in HBM4. That is the strong side. The weak side: profit depends almost entirely on a cyclical business. Some of the device divisions are making losses. The foundry is still searching for its place against TSMC.
For my check, I proceed in a fixed order. First the business: memory prices, HBM shares, foundry orders. Then the stock’s long-term trend. Finally the short-term momentum. This order does not replace a personal investment decision. But it prevents a single record announcement or a red trading day from dominating the analysis.