Samsung has staged a stunning comeback But political trouble is brewing May 14th 2026 Not long ago Samsung Electronics was in the doldrums. In 2024 the South Korean giant apologised for failing to maintain “technological competitiveness” and “falling short of the market’s expectations”. It has no need for contrition these days. This month its market value, which has soared by 400% in the past year, hit $1trn for the first time, propelled by furious spending on artificial-intelligence infrastructure. In the first quarter of 2026 its operating profit rose to 57trn won ($38bn), more than eight times as much as a year before. Analysts expect profits to keep rising at a blistering pace, thanks in particular to the seemingly insatiable demand for its advanced memory chips.
Samsung Electronics manages a wide portfolio of products, making everything from fridges to phones. Increasingly, however, its business centres on chipmaking. Semiconductors accounted for 61% of sales and 94% of operating profits in the first quarter. It is one of just three firms capable of making at scale the memory chips needed for AI, alongside SK Hynix, a South Korean rival, and Micron, an American one. The number of memory chips Samsung sold in the first quarter was up by about 20% on the preceding three months, but the average selling price rose by 90%. The firm boasts that memory-starved buyers are approaching them to demand long- term purchase agreements. It foresees the shortage lasting well into next year. Samsung is expanding capacity, but relatively slowly. A new facility will start mass-producing chips for sale later this year, and the firm will begin building another, which will cost it some $55bn, in July. Yet that factory, known as P5 Fab 2, will not be ready until 2030. And although capital expenditure is set to rise by 55% this year, according to Daniel Kim of Macquarie, a bank, it is falling as a share of revenue. Samsung’s management, perhaps unsurprisingly, continues to display caution. Chipmaking factories are enormously expensive and take years to complete, resulting in a historical cycle of booms and busts. The company will not want a repeat of the last flash-memory boom-bust cycle, when it overbuilt capacity as demand surged, then saw its operating profit fall by half in 2019, notes Jukan Choe of Citrini Research, a firm of analysts. Meanwhile, Samsung is also expanding its foundry business, which manufactures chips designed by others. A new fab in Texas, catering to American customers, will open this year. The loss-making division has long trailed TSMC, the Taiwanese industry leader, and suffered in recent years from complaints of inconsistent execution. A larger customer base has allowed TSMC to gain scale and know-how, creating a self-reinforcing advantage. But the AI boom is aiding Samsung’s foundry efforts in two ways. First is that TSMC is booked to the brim. That has already pushed some customers towards Samsung, including Tesla, a carmaker, and Qualcomm, a chip
designer. Second is that fat profits in the memory business mean the company has more cash to invest. Yet the success of the memory division has created other problems. Soaring prices have damaged Samsung’s once-thriving consumer-electronics business. Margins are being squeezed in the smartphone division; it may post a loss this year. Political trouble is also brewing. On May 11th Kim Yong-beom, an adviser to Lee Jae Myung, South Korea’s president, proposed a “national dividend” to redistribute chipmaking profits to citizens. Mr Lee has since said only excess tax revenue from the chip boom is being considered, not a new tax. A coalition of Samsung unions is also demanding that 15% of the memory division’s profits be distributed to workers, similar to an arrangement already in place at SK Hynix. They are threatening a multi-week strike beginning on May 21st, which would cost Samsung some 30trn won. (Ironically, union members also lambasted Samsung for failing to capitalise on the AI boom during a strike in 2024.) The problems of success may feel like a welcome change for Samsung’s bosses. But they are problems nonetheless. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/14/samsung-has-staged-a-stunning- comeback
The strange Japanese companies minting money from AI What the creator of MSG and the world’s biggest toilet-maker have in common May 14th 2026 Ajinomoto has spent well over a century supplying monosodium glutamate (MSG), a chemical that gives food an umami kick. Now another of the Japanese seasoning giant’s products is whetting investors’ appetites. Ajinomoto Build-up Film (ABF) is a material used to insulate artificial- intelligence processors from circuit boards. It was originally made from by- products of MSG manufacturing. Ajinomoto controls more than 95% of the market. Booming demand for AI chips has made the film scarce, pushing Ajinomoto’s share price up by 65% since the start of the year, around three times the gain in Japan’s benchmark Nikkei index.
Toto, another century-old Japanese firm, has lately enjoyed an equally improbable flush of prosperity. Best known as the world’s largest toilet- maker, it has found a profitable seat in the semiconductor supply chain. The firm is a leading producer of electrostatic chucks: ceramic plates that hold silicon wafers firmly in place while memory chips are etched. Toto’s operating profit from advanced ceramics now accounts for more than half its total. The AI frenzy has produced obvious winners in semiconductors: American chip designers, South Korean memory-makers, Taiwanese foundries. Japan has its equivalents, with giants such as Tokyo Electron and Advantest that make the sophisticated equipment used to fabricate and test chips. But like Ajinomoto and Toto, many of the country’s AI winners are in less flashy trades. Hoya, a health-care company that makes spectacles and contact lenses, is a leading supplier of photomask blanks: transparent plates coated with light-sensitive material that lithography tools use to etch chip designs onto silicon wafers. Sakura, a stationery brand, has adapted technology once used for coloured pencils to spot defects in chip- manufacturing processes. Nitto Boseki (or Nittobo), which began life as a textile company in 1923, is today the sole supplier of “T-glass,” an ultra-thin glass fibre essential for packaging AI chips. Two factors explain this eclectic industrial cast. The first is history. In the 1980s Japan was a semiconductor superpower, accounting for more than half of global chip production. Six of the world’s ten biggest chip firms in 1989 were Japanese. Those champions created demand for local suppliers of all sorts. The country’s firms still dominate several niches in the supply chain, particularly for materials and tools. The second factor is culture. David Dai of Bernstein, a broker, argues that Japanese companies keep developing technology even when demand is not yet obvious, and rarely abandon it. That lets them deepen their knowledge over decades. When the opportunity finally appears, they are ready, armed with better technology and more credibility than newer rivals. Ajinomoto began work on ABF in the 1970s, as it looked for ways to apply the chemistry behind MSG elsewhere. Only in 1999 was the material first adopted by a major chipmaker.
Yet this Zen-like patience has a drawback. When demand spikes, Japanese suppliers can be maddeningly slow to respond. Ajinomoto, Nittobo and Toto all have plans to expand capacity for their chip-related products. But their responses look distinctly unhurried when compared with the breakneck advances in AI. Foreign tech giants hoping for a newfound hunger, however, are bound for disappointment. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/14/the-strange-japanese-companies- minting-money-from-ai
Companies are making big bucks from immigration crackdowns And startups are piling in with whizzy new technologies May 14th 2026 The exhibition hall of the annual Border Security Expo (BSE), held this month in Phoenix, Arizona, looked more like the set of a dystopian science- fiction film. Surveillance towers flashed brightly. Drones buzzed overhead. One company demonstrated a robotic dog designed to patrol borders. Another showed off a thermal camera that can detect movement kilometres away. On stage Tom Homan, President Donald Trump’s “border czar”, praised the technology firms in attendance for helping to build “the most secure border in history”. As the bustling trade fair demonstrated, the business of immigration enforcement is booming. Right-wing populists—and incumbents seeking to
fend them off—are spending more on monitoring borders, tracking down those who have entered the country illegally, then detaining and deporting them. In America, Congress has approved roughly $170bn in cumulative additional funding for immigration enforcement until 2029. Even the European Union is ratcheting up spending. That is benefiting not only incumbent outsourcers, but also a wave of startups hoping to bring new technologies to the industry. Border control is an area of particular interest for newcomers. Much of that business has tended to flow to large defence contractors and established security firms. Yet agencies across America and Europe have been simplifying procurement rules and running pilot programmes to allow new products to be tested and deployed more quickly, luring in startups. As a result, what was once a labour-intensive system of patrol agents, radios and vehicles is turning into a digital-surveillance network. Governments increasingly rely on drones, radars, heat-detecting cameras and the like to monitor vast swathes of territory in real time. Such technologies reduce risks for agents and free them up for higher-value work, according to Steven Willoughby, an official at America’s Department of Homeland Security. Instead of relying on agents scouring remote terrain, authorities can now monitor deserts and coastlines from centralised command centres. Much of the new tech being used at borders was originally developed for warfare. Anduril, a drone-maker that recently raised $5bn at a $61bn valuation, has a $363m contract with the US Border Patrol for autonomous surveillance systems. Shield AI, a rival, has won a $198m contract with the US Coast Guard, and is also deploying its drones on European borders. Immigration and Customs Enforcement (ICE), the controversial agency that tracks down illegal immigrants already in America, has come to rely on software provided by Palantir, a data-analytics firm embedded in the Pentagon. The business of housing detained immigrants has drawn less interest from Silicon Valley. But it is booming nonetheless. Already ICE has increased detention capacity to around 70,000 beds, up from roughly 40,000 before Mr Trump returned to office last year, and is aiming for 100,000. That has been good for prison operators such as CoreCivic and Geo Group, which run