While rival LG Electronics reported another drop in profits and revenue this week, Samsung Electronics is heading in the opposite direction — on track to post its highest operating profit in three years, driven by booming demand for artificial intelligence memory chips.

The South Korean tech giant is expected to report a 30% year-on-year jump in operating profit for the September quarter, reaching an estimated A$13.1 billion. The surge comes despite ongoing issues within its Australian subsidiary.

Analysts attribute most of the growth to Samsung’s device solutions division, which includes its memory chip and foundry operations. Demand has soared for the high-performance semiconductors used in AI applications, with Samsung winning new contracts from major clients such as Nvidia. The company has also signed a letter of intent with OpenAI to supply chips for the ChatGPT maker’s ambitious US$500 billion Stargate data centre project.

However, Samsung’s TV and home appliance divisions have reportedly seen “significant” declines in revenue.

Samsung’s stock rose as much as 3% on the news, extending a rally of more than 66% over the past six months. By comparison, LG Group shares are up just 15% in the same period.

According to TrendForce, Samsung holds just over a quarter of the global market for high-bandwidth memory (HBM) products — key components in AI processors — with SK Hynix and Micron rounding out the top three suppliers.

Samsung’s HBM unit suffered last year after losing Nvidia’s main supplier role to SK Hynix and facing US export restrictions on advanced chip shipments to China. But analysts say the company is now rebounding as tech giants rush to secure customised AI chips requiring specialised memory.

That surge in demand has pushed up prices for DRAM chips, which handle short-term data storage and remain one of Samsung’s core strengths. It’s also expected to lift sales of NAND flash memory, used for long-term data storage.

Samsung’s contract chipmaking business has gained further momentum this year after securing deals to produce AI chips for Tesla at its new Texas fabrication plant. The move has boosted optimism that Samsung can curb losses and regain ground lost to TSMC over the past decade.

In another major win, Apple announced in August that Samsung will manufacture image sensors in Texas for its next-generation iPhone — a sign of renewed cooperation between the two companies after their bitter patent disputes in the 2010s.