Samsung Electronics is predicting a record-breaking first-quarter operating profit, fueled by a surge in demand for its memory chips supporting artificial intelligence workloads. The world's largest memory chip supplier anticipates an operating profit of 57.2 trillion won ($37.9 billion), significantly exceeding analyst expectations and marking an eightfold increase from the previous year.
The company is a major beneficiary of the AI boom, with demand for its memory chips, used in AI servers, personal computers, and smartphones, outstripping supply. Memory chip prices are expected to rise over 50% this quarter due to ongoing shortages. Samsung's chip division is estimated to account for approximately 95% of the total profit, while its smartphone business is projected to contribute around 4 trillion won.
Samsung has made strides in the high-bandwidth memory (HBM) chip segment, recently shipping its latest HBM4 chips to customers and regaining market share from rivals. However, the bulk of its profit stems from surging prices of traditional memory chips essential for AI inference.
Despite strong performance, headwinds exist. Rising energy costs and potential supply chain disruptions from geopolitical conflicts could impact future demand for AI data center memory chips. Analysts express concerns about a potential peak in memory price increases, with spot prices for DRAM showing signs of softening.