South Korean technology giant Samsung Electronics announced on July 7 that it expects to post operating profits of 89 trillion won — approximately £44 billion or $58 billion — for the second quarter of 2026, a nineteen-fold increase on the same period a year earlier. This would mark Samsung’s third consecutive record quarterly operating profit. The company attributed the surge primarily to global demand for artificial intelligence memory chips, which has pushed semiconductor prices sharply higher as supply struggles to keep pace with demand. Samsung is one of the world’s largest semiconductor manufacturers, supplying chips to companies including Nvidia and Google. Shares in Samsung have more than doubled in price since the start of 2026, while South Korean rival SK Hynix has risen by more than 200% over the same period. Samsung releases earnings guidance ahead of its full quarterly results, which are due later in July.
The received wisdom
The mainstream technology press reads Samsung’s results as confirmation of the AI boom thesis: artificial intelligence is driving a structural shift in global semiconductor demand, and the companies positioned in memory and logic chip production are the primary beneficiaries. The argument runs that AI model training and inference require extraordinary quantities of high-bandwidth memory (HBM) — the type Samsung and SK Hynix produce — and that this demand is sufficiently durable and growing sufficiently fast that the current earnings cycle is not a temporary spike but a sustained re-rating of the sector’s value. The geopolitical story embedded in this reading is relatively benign: the AI chip boom is lifting all boats, driving investment, and powering a new industrial transformation in East Asia.
A different read
There is a great deal that is simply true in that reading. The AI memory demand cycle is real, it is large, and it is restructuring global supply chains in ways that matter economically. But the Samsung earnings story has dimensions that the standard technology-optimist framing tends to minimise, and two of them are particularly worth examining from a right-of-centre analytical perspective.
The first is the extraordinary concentration of economic benefit this cycle represents. The nineteen-fold profit increase at Samsung and the 200%-plus share price gain at SK Hynix are not broadly distributed economic outcomes. They are windfalls accruing to a small number of firms in a small number of countries — South Korea, Taiwan, the Netherlands (ASML), and to a lesser extent the United States — while most of the world’s population experiences AI primarily as a potential displacement threat to their livelihoods rather than a source of investment returns. The political economy of this concentration has not yet fully worked itself through. But in countries already experiencing wage stagnation and anxiety about automation — which is to say, most Western democracies — the spectacle of a single Asian technology company earning £44 billion in a single quarter while domestic manufacturers close plants and lay off workers is not an abstract observation. It is the kind of material fact that fuels the anti-globalist politics that has been reshaping Western electorates since 2016.
The second dimension is strategic. The AI chip supply chain is not merely a commercial arrangement. It has become a central front in the competition between the United States and China for technological supremacy. Washington has invested enormous political capital — and deployed extensive export controls — in an effort to prevent advanced semiconductors from reaching Chinese AI developers. Samsung and SK Hynix are South Korean companies operating within that American-led restriction regime, and their profits partly reflect the pricing power that flows from being on the permitted side of a deliberately constrained market. The question that Samsung’s earnings raise, indirectly but importantly, is what happens to this earnings cycle if the geopolitical restrictions loosen — through a diplomatic settlement, a change in US political direction, or successful Chinese domestication of advanced chip manufacturing — or if they tighten further in ways that interrupt supply chains that now pass through East Asian production centres that are themselves within range of Chinese military pressure.
Microsoft’s simultaneous announcement of 4,800 job cuts and a significant restructuring of its Xbox division is a useful counterpoint. The AI boom is not lifting every technology company’s fortunes. It is lifting the fortunes of those in the specific supply chain of AI hardware and cloud infrastructure while the older consumer technology economy — gaming, devices, productivity software — is being squeezed and restructured. That pattern of concentrated gains and distributed disruption is the economic signature of major technological transitions historically: it was true of the steam revolution, the electrification era, and the internet boom. It is true now. The political challenge is not whether the technology itself is good or bad, but whether democratic institutions can manage the distributional consequences at a pace that maintains social cohesion.
The Samsung result is, among other things, a number that concentrates the mind about who is winning the AI era and whether that winning is being shared. A company that earns £44 billion in a quarter while its government’s diplomats manage delicate technology export negotiations with Washington is not operating in a simple commercial market. It is operating at the intersection of geopolitics and industrial policy, and the West’s semiconductor architecture depends on it getting that intersection right.
What to watch
Watch Samsung’s full quarterly report later in July for details on HBM chip pricing and order book visibility — if forward guidance softens, it will signal that the demand surge is plateauing. Watch ASML’s next earnings: as the sole manufacturer of the extreme ultraviolet lithography machines that produce leading-edge chips, ASML’s revenue trajectory is a leading indicator for the entire advanced semiconductor supply chain. Watch US-South Korea diplomatic signals around semiconductor export controls, which periodically need renegotiation as Washington tightens restrictions on China. And watch whether Microsoft’s job cuts are a harbinger of broader rationalisation in the non-AI technology sector, which would affect consumer spending patterns and the political economy of the AI transition.
— J