Samsung Electronics projects a dramatic eightfold increase in first-quarter profit, significantly surpassing expectations due to surging demand for artificial intelligence infrastructure. This boom has constrained traditional chip supply, driving up prices.
The company estimates an operating profit of $37.92 billion for January-March, a substantial jump from $6.69 billion a year prior. This performance nearly triples Samsung's previous quarterly record.
Research firm TrendForce anticipates further increases in DRAM chip prices due to persistent shortages. Analysts note that anticipated price hikes led customers to secure contracts at higher rates.
The weakening South Korean currency has also boosted repatriated earnings for Samsung.
Samsung's chip division is estimated to have generated $35.6 billion in operating profit, representing 95% of its total. Its mobile division posted a $2.65 billion profit, a slight decrease year-over-year, supported by lower-cost component inventories.
Samsung reported a 68% revenue increase to $88 billion for the quarter. The company will release detailed results on April 30.
Concerns linger regarding rising energy costs and potential disruptions to chipmaking materials. Analysts suggest the memory price increase cycle may be entering a later stage.
Spot prices for DRAM chips have recently eased, indicating end-user demand is struggling to absorb elevated prices. This, along with new memory-saving technologies, has contributed to a selloff in memory chip stocks, though Samsung's shares remain up significantly year-to-date.
Samsung is narrowing the gap in high bandwidth memory (HBM) chip supply, shipping its latest HBM4 chips to Nvidia. However, the current profit surge is primarily driven by the rebound in traditional chip demand fueled by AI inference.