Samsung’s Q1 Profit Surges Amid Chip Demand
Samsung Electronics reported a modest 0.2 percent decline in its first-quarter operating profit, a figure that exceeded analysts’ expectations. The tech giant attributed this performance to robust sales of memory chips and a surge in smartphone demand, driven in part by concerns over impending U.S. tariffs. The company anticipates releasing detailed financial results on April 30.
Strong Memory Chip Sales Drive Profitability
Samsung Electronics has estimated an operating profit of KRW 6.6 trillion (approximately $4.49 billion) for the January-March period. This figure is significantly higher than the KRW 5.1 trillion forecast by LSEG SmartEstimate. In comparison, the company reported an operating profit of KRW 6.61 trillion during the same period last year and KRW 6.49 trillion in the previous quarter. Analysts noted that while general memory prices have declined, the strong demand from customers eager to secure inventory ahead of potential U.S. tariffs has bolstered Samsung’s memory chip shipments. Greg Roh, head of research at Hyundai Motor Securities, emphasized that this demand played a crucial role in supporting the company’s overall performance.
Following the announcement of its preliminary earnings, Samsung’s shares rose by 2.6 percent in morning trading, outperforming the benchmark KOSPI index, which increased by 1.6 percent. This positive market reaction reflects investor confidence in Samsung’s ability to navigate the current economic landscape.
Concerns Over Future Performance
Despite the strong first-quarter results, analysts are cautious about Samsung’s prospects for the second quarter. Recent announcements from U.S. President Donald Trump regarding reciprocal tariffs on trading partners, including China, have raised concerns. Although semiconductors were initially exempt from these tariffs, Trump has indicated plans to impose tariffs on chips in the near future. This uncertainty could impact demand and sales moving forward.
Analysts predict that Samsung’s operating profit may stagnate in the second quarter, partly due to delays in securing new customers for high-bandwidth memory (HBM) chips. Kim Sun-woo, a senior analyst at Meritz Securities, noted that the profit from Samsung’s chip division could have halved to around KRW 800 billion from the previous year, as losses in the foundry business offset gains from memory chips. The foundry business involves manufacturing chips on a contract basis for major clients like Nvidia, Qualcomm, and AMD.
AI Chip Market Challenges and Future Outlook
Samsung has faced challenges in the AI chip market, particularly due to U.S. export restrictions to China, its largest market. In a recent shareholder meeting, Samsung executives acknowledged the company’s slow response to the booming AI chip sector, which has affected its share price. However, they remain optimistic about a recovery in chip earnings in the latter half of the year, driven by demand for smartphones and data centers. The company aims to begin supplying its enhanced HBM3E 12-high chips to Nvidia by mid-year, which could further bolster its position in the market.
Meanwhile, South Korea’s SK Hynix, the world’s second-largest memory chipmaker, reported that some customers have expedited orders in anticipation of new U.S. tariffs, although they remain cautious about a sustained recovery in demand. In contrast, Micron Technology recently forecasted third-quarter revenue that exceeds Wall Street estimates, indicating strong demand for its HBM chips used in AI applications.
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