Samsung Q1 Operating Profits Soar Nearly Tenfold

Samsung said Tuesday that its first-quarter operating profits had risen nearly tenfold year-on-year amid recovering chip prices and growing demand, notably for generative AI.

“Operating profit increased to KRW 6.61 trillion ($4.85 billion) as the Memory Business returned to profit by addressing demand for high value-added products,” it said in a statement.

Strong smartphone sales, higher prices for semiconductors plus a focus on high-value-added products including HBM — the high-bandwidth memory used in AI hardware — were key to the strong performance, it said.

“Looking ahead to the second quarter, the industry is expected to remain solid, led mainly by demand for generative AI,” the company added.

Sales were up 12.8 percent on-year to 71.9 trillion won, the company said.

“Demand for on device AIs and high resolution features continues to drive our production,” said Tommy Kwon, vice president of Samsung’s system LSI business, on an earnings conference call.

The weakness of the Korean won — down nearly seven percent against the US dollar so far this year — “resulted in a positive impact on company-wide operating profit of about KRW 0.3 trillion compared to the previous quarter,” Samsung added.

Samsung’s net profit of 6.75 trillion won exceeded market expectations, which had been estimated at 4.99 trillion won, according to a survey conducted by the financial data firm Yonhap Infomax.

South Korean chipmakers, led by Samsung, enjoyed record profits in recent years as prices for their products soared, but a global economic slowdown dealt a blow to memory chip sales.

However, the semiconductor market had been predicted to recover this year and grow 11.8 percent, according to industry monitor World Semiconductor Trade Statistics.

Samsung’s “overall outlook is secured by a resurgence in the smartphone market, escalating DRAM prices, and a modest decline in Fed interest rates,” Brady Wang, associate director of market research firm Counterpoint, said.

“Samsung is strategically positioned to thrive amidst the evolving market conditions.”

“But to maintain its momentum, the company needs to focus on accelerating development in emerging areas like high bandwidth memory, crucial for AI and high-performance computing,”