Despite their soaring profits, the companies’ shares have fallen sharply this week in South Korea’s volatile stock market, where retail investors often drive sharp swings in share prices, as concerns grow over their plans to spend massively on increasing manufacturing capacity and the prospects of intensifying competition from China.

Samsung’s second-quarter operating profit was a more than 19-fold increase from a year earlier, and nearly all of it came from its semiconductor business, which benefited from rising chip prices driven by demand for AI servers and increased shipments of advanced high-bandwidth memory chips used to power AI applications. That outweighed an operating loss in its mobile, TV and home appliances division, partly due to higher component costs.

Samsung’s quarterly revenue of 171.5 trillion won ($119 billion) was also an all-time high. The company said it expects demand for its memory products to remain strong in the second half of the year, driven by continued expansion of AI infrastructure and broader adoption of agentic AI. Demand for server chips is expected to accelerate further, keeping the market undersupplied, it said in a statement.

Samsung’s report came a day after SK Hynix also reported a record second-quarter revenue of 60.5 trillion won ($42 billion). However, SK Hynx’s profit was still below the loftier market expectations and the company’s shares declined by more than 9% on Wednesday. Samsung’s share prices have also declined this week.

Kim Jaejune, an executive of Samsung’s memory chip division, said the company expects the gap between chip supply and demand to widen further in 2027. He said Samsung plans to begin construction of its second semiconductor fab in Taylor, Texas, before the end of this year, with the goal of starting production by 2030.

Kim said Samsung has secured long-term chip supply contracts with what he called the “five major global data center clients” — a possible reference to Amazon Web Services, Google, Meta, Oracle and Microsoft –- and is in talks with other major technology companies as demand for AI infrastructure surges.

“Despite our efforts to increase production, demand growth is outpacing our efforts,” he said in a conference call.

Samsung and SK Hynix together produce about two-thirds of the world’s memory chips. While the companies have embarked on major investments in semiconductor manufacturing facilities and data centers as South Korea expands its AI ambitions, some analysts say there are growing concerns about whether such massive spending will ultimately generate sufficient returns.

Shares of South Korean chipmakers have also been pressured by concerns over intensifying competition from China, with reports that a state-owned Chinese company had begun mass-producing domestically developed immersion deep-ultraviolet (DUV) lithography machines, a key technology for advanced chipmaking. Investor concerns were also heightened by the strong stock market debut of Chinese memory chipmaker ChangXin Memory Technologies, some analysts say.

Samsung and SK Hynix last month announced plans to invest a combined 800 trillion won ($554 billion) in a new chipmaking hub in the country’s southwest to capitalize on surging AI-driven demand.

The chiefs of Samsung, SK and South Korean automaker Hyundai joined President Lee Jae Myung on his San Francisco trip last week, where they announced hundreds of billions of dollars in planned cooperation with major U.S. technology companies, including AI firms OpenAI and Anthropic and chip designers Nvidia and Broadcom. The agreements span chip technologies, data centers and other AI infrastructure.

In a roundtable with foreign media last week, Kim Yong-beom, Lee’s chief policy adviser, said the initiatives reflect how global technology companies are rushing to secure long-term partnerships with South Korean chipmakers as they seek reliable supplies of memory chips for AI.

However, the volatility of the companies’ stock prices, along with those of other global tech firms, shows that investors are shifting their focus from short-term earnings to long-term sustainability, Son In-joon, a semiconductor analyst at South Korea’s Eugene Securities, said in a report this week.