005930.KS

Overall Financial and Shareholder Returns

• The company delivered new all-time highs for both revenue and operating profit in Q2 2026, building on the prior quarter's record performance, driven by technology leadership in AI and resilient performance amid ongoing macro and geopolitical uncertainty.
• The Board of Directors approved a Q2 dividend of KRW 374 per common and preferred share, consistent with the 2024-2026 3-year shareholder return policy which commits to an annual regular dividend of KRW 9.8 trillion paid via quarterly installments of KRW 2.45 trillion. Management remains fully committed to delivering on the current program and will provide updates on the next policy shortly.

Capital Expenditure

• Q2 capital expenditure increased QoQ to KRW 16.8 trillion, with the vast majority allocated to the DS division. Memory CapEx rose to expand Pyeongtaek new fab and AI-related advanced R&D infrastructure in response to sustained AI demand growth. Foundry CapEx increased to support on-track ramp-up of the Taylor, U.S. fab. Display CapEx rose for ongoing supplementary investments in the new Gen 8.6 IT OLED line.

Sustainability Achievements

• Published the 2026 sustainability report in June 2026; the company's global renewable energy transition rate reached 32.5% in 2025, up 1.1 percentage points YoY; the proportion of recycled plastic used in products rose 2.7 percentage points YoY to 33.7%, advancing circular economy commitments. Samsung has now achieved 4 consecutive years with no serious workplace accidents.

Segment Operational Highlights

• Memory: Strong AI-driven demand from hyperscaler customers for both DRAM and NAND continued, with the company prioritizing sales to high-demand server applications under constrained production capacity. It expanded HBM4 supply and shipped the first industry HBM4E samples, cementing technology leadership.
• System LSI: Secured next-generation flagship SoC design wins and added new customer awards across SoC, image sensor, and LSI product categories.
• Foundry: Expanded the 2-nano process order pipeline for major HPC and cloud customers, with utilization rates improving across all nodes, and advanced nodes (8-nano and below) reaching full utilization.
• Samsung Display: Began full-scale mass production at the new Gen 8.6 IT OLED line in July 2026, leveraging existing mobile OLED process expertise to meet quality and performance requirements.
• MX: Prioritizes a two-pillar strategy: 1) flagship-first expansion to grow market share via premium product mix expansion (including the new Z8 foldable series, upcoming S26 FE, and A-series AI upselling) and new premium form factors (including upcoming intelligent eyewear); 2) end-to-end efficiency and agile sales mix adjustment to protect profitability amid rising component costs.
• Visual Display: Leveraged product competitiveness to capture demand from a major global sporting event, and is building leadership in AI TV via differentiated Vision AI-powered viewing experiences, while expanding high-margin advertising and OS licensing businesses.
• New Growth Initiatives: Samsung consolidated all robotics capabilities into a new dedicated RX business office reporting directly to the CEO, to develop B2B manufacturing/logistics robotics first, with a long-term goal of expanding into B2C humanoid robots, leveraging existing semiconductor, AI, and manufacturing capabilities.

• Overall company growth momentum is expected to continue in the second half of 2026, supported by sustained strong semiconductor demand driven by the rapid spread of agentic AI.
• Memory: Supply-demand tightness will deepen through 2028, with unmet 2026 demand carrying over to 2027 and more severe constraints expected in 2027 than 2026. Q3 2026 bit growth is guided to mid-single-digit QoQ for DRAM and high single-digit QoQ for NAND. Samsung plans to optimize product mix to prioritize high-demand AI-related products, and target 60-70% of total memory capacity allocated to multiyear supply agreements with major customers, with 5-year rolling contracts that include substantial advance payments. HBM4 sales are expected to more than triple QoQ in Q3 2026, and will account for well over 60% of total HBM revenue in H2 2026. QLC NAND bit shipments are expected to more than double H1 2026 in H2 2026, and mass production of V10 V-NAND (3-stack bonding architecture) is scheduled to begin in August 2026. Samsung will maintain a balanced supply mix between HBM and conventional server DRAM to meet all demand segments.
• System LSI: Overall consumer demand is expected to remain soft amid ongoing component cost pressure, but the company will expand into high-value segments: advance custom SoC business, expand 200-megapixel image sensor to new applications, and reinforce high-end DDI leadership while growing power IC business.
• Foundry: Full year 2026 revenue is expected to grow double-digit or higher YoY. 2-nano project wins are expected to more than double YoY in 2026. Mass production of second-generation 2-nano mobile products will begin in H2 2026, with volume production ramping for 4-nano LPU products. Taylor Fab 1 will commence operations in 2026 as planned, and construction of Taylor Fab 2 will begin by end of 2026 targeting mass production in 2030. The segment expects significant year-on-year profitability improvement driven by higher utilization, improved yields, and pricing adjustments, with a return to profit possible in the near term.
• Samsung Display: Sales volume may decline due to elevated finished product prices from memory supply constraints, but revenue will grow via expanded premium product sales and full mass production of the new Gen 8.6 line. The company expects short-term earnings pressure from ramp-up fixed costs, but will improve cost competitiveness via full oxide technology and large substrate process efficiency, with the new line expected to contribute to earnings longer-term.
• MX: Full-year 2026 smartphone shipments are expected to decline amid soft demand and rising memory prices, but premium segment demand will remain resilient, and full-year sales volume and ASP are both expected to increase. The company will launch new premium products (Z8 foldable, Tab S12, Watch Ultra 2) in H2 and continue A-series upselling to offset memory cost pressure.
• Visual Display: TV market demand will slow after the major sporting event, with macro and geopolitical uncertainty persisting. The company will expand AI TV sales via differentiated Vision AI experiences, capture peak season demand, and grow profitability via expanding advertising and OS licensing businesses.
• Management is maintaining its target of establishing leadership in the agentic AI market across all business segments, and continues to invest in mid-to-long term new growth engines including robotic HVAC, automotive electronics, and medical technology.

Total company revenue reached KRW 171.5 trillion (up 28% quarter-on-quarter), with operating profit of KRW 89.5 trillion (up 56% QoQ) and an operating margin of 52% (up from 43% QoQ). Net profit rose 52% QoQ to KRW 71.6 trillion, and R&D expenditure hit a new quarterly high of KRW 16 trillion, up from KRW 11 trillion QoQ. Capital expenditure for the quarter totaled KRW 16.8 trillion (up KRW 5.5 trillion QoQ), with KRW 15.4 trillion allocated to the DS division and KRW 0.7 trillion to the Display business.

1. DS (Device Solutions) Division: Driven by robust AI-related demand, the segment delivered another record quarter. Memory achieved all-time high bit shipments for both DRAM and NAND: DRAM bit shipments grew low teens QoQ, with ASP up mid-40% QoQ; NAND bit shipments grew low single-digit QoQ, with ASP up high 60% QoQ. Samsung shipped the industry's first HBM4E samples to major customers this quarter. System LSI faced headwinds from mobile market seasonality and weakness in China, but maintained steady quarterly revenue and achieved a record first-half revenue, driven by high-volume mobile SoC and imaging sensor sales. Foundry delivered rising revenue and significant earnings improvement (pre-incentive charges), driven by growing demand for HBM-based memory products and U.S. customer orders; the segment expanded its 2-nano HPC order pipeline with major cloud and HPC customers.

2. DX (Device eXperience) Division: The segment achieved year-on-year revenue growth supported by strong premium and AI product sales, but operating profit declined due to rising component costs.

• Mobile eXperience (MX): Q2 revenue reached KRW 32.3 trillion, with combined MX and Network operating loss of KRW 0.7 trillion. Sales volume rose QoQ and revenue grew YoY driven by solid flagship S26 family sales and strong A-Series momentum, but profitability fell due to industry-wide component cost increases.
• Visual Display (VD): Sales and profitability grew YoY (driven by pre-emptive capture of demand for a major global sporting event and new product launches) but profitability dipped QoQ due to higher raw material costs including memory.
• Samsung Display: Mobile display performance improved QoQ on solid high-end mobile product demand; large display sales volume and revenue grew QoQ driven by growth in the gaming monitor market.

Revenue contribution notes: For 2026 full year, Foundry expects advanced node revenue contribution to exceed 50%, and AI/HPC application revenue share to grow from 2025's high-teens percentage to over 30%. For Memory, server SSD is expected to exceed 60% of Samsung's NAND sales mix in 2026, a 20+ percentage point increase YoY.

• Ongoing macroeconomic and geopolitical uncertainty continues to create market volatility and impact consumer electronics demand.
• Persistent memory supply constraints driven by exponentially growing AI demand have pushed up component costs, pressuring profitability for downstream segments including MX, Visual Display, and Samsung Display.
• Rising raw material and component costs across the industry have reduced profitability for the DX division, creating ongoing pressure for operational efficiency.
• While memory demand growth is strong, limited available production capacity means Samsung cannot accommodate all customer requests for multiyear supply agreements, creating customer relationship risk.
• Advanced node capacity expansion for Foundry requires large upfront capital investment with long lead times to production, creating execution and demand forecasting risk.
• The ramp-up of the new Gen 8.6 IT OLED line for Samsung Display creates short-term fixed cost pressure that weighs on near-term earnings.
• Multiyear memory supply agreements require pricing that compensates for future investment risk, and misalignment on pricing terms with customers could limit the benefit of these long-term contracts.

Q: As we reach the midpoint of the 3-year shareholder return policy, can you update on the current policy and plans for the next policy? Will memory customer prepayments and share repurchases for employee compensation impact free cash flow for returns? / A: Management remains fully committed to delivering on the current 3-year policy as promised, and the Board is actively discussing this year's special dividend and plans for the next policy. The 50% of free cash flow return target can be impacted by memory LTAs customer prepayments and employee compensation share repurchases. For the next policy, management is working to balance reinvestment for future growth with long-term shareholder value, and will share details soon.

Q: Will the current memory supply shortage continue into next year, and what is your mid-to-long term demand outlook? / A: Exponential growth in token consumption from agentic AI is driving unprecedented demand for memory across AI servers and general computing, with supply expected to remain significantly constrained through 2028. New fab construction takes over 3 years to reach production, so no meaningful supply increases are expected before 2029, with shortages worsening in 2027 compared to 2026. Customers are now requesting multiyear supply agreements to lock in capacity, which will help Samsung transition from cyclical to more stable business with greater long-term demand visibility.

Q: What is the status of multiyear memory supply agreements, including capacity allocation, contract terms, and pricing? / A: Samsung has already finalized multiyear agreements with the top 5 global data center customers, and is in final talks with 5 additional major accounts. When pending contracts are finalized, 60-70% of mid-to-long term planned capacity will be under multiyear agreements, which is higher than the initial target. Contracts use a 5-year rolling term, with annual renewal negotiations, and require substantial advance payments to secure commitments. Pricing includes minimum price floors to mitigate investment risk from volatility, with differentiated models for different customer and product segments. Samsung will maintain a balanced customer base to avoid overreliance on any single customer.

Q: What is the strategic roadmap for Samsung's new dedicated robotics organization? / A: Samsung consolidated all robotics capabilities into a new CEO-led RX business office to unify strategy, hardware/software development, and product planning. It is building a pilot production line and data factory in Gumi, and has hired leading robotics experts to lead development. The initial focus is on B2B manufacturing and logistics applications to secure core technology and data, with a long-term goal of developing intelligent multipurpose humanoid robots to expand into the B2C market. Samsung will leverage its semiconductor leadership (high bandwidth memory, AI XPUs, foundry, advanced packaging) to build differentiated competitiveness in physical AI-enabled robotics.