Samsung Electronics beats Q1 estimates, but chip woes persist
Samsung Electronics on Wednesday reported a stronger-than-expected earnings for the first quarter, buoyed by robust sales of its AI-enhanced Galaxy S25 smartphones, even as its key chip division continues to tumble.
For the January-March period, the tech giant posted an operating profit of 6.69 trillion won ($4.69 billion), up 1.2 percent from a year earlier. The figure exceeded analysts' expectations, which had hovered in the 5 trillion-won range.
Revenue for the quarter came to 79.14 trillion won, up 10.05 percent on-year, marking an all-time quarterly high. Net profit climbed 21.7 percent to 8.22 trillion won from the same period last year.
The upbeat results came despite persistent woes in the critical semiconductor segment. The company's chip division, the Device Solutions unit, posted an operating profit of 1.1 trillion won, down 0.8 percent on-year, and marked the third consecutive quarter of declining performance. Its sales slumped 17 percent to 25.1 trillion won, due to a drop in sales of the key high-bandwidth memory chips.
While demand for DRAM and NAND sales improved during the period as customers anticipated a price rebound, the overall gains were dampened by weak HBM sales, which were impacted by US export controls on AI chips.
In a conference call, Kim Jae-joon, executive vice president of the DS division, told investors that the company is expected to see its sales rebound as it expands the supply of improved 12-layer HBM3E AI chips to clients.
'We have completed supplying samples of the improved HBM3E products to our major clients, and we expect to see more companies purchase from the second quarter,' Kim said. 'Sales of HBM have hit bottom in the first quarter, but are expected to recover gradually, quarter by quarter.'
Samsung is still waiting to secure Nvidia's green light for its HBM chips -– a critical component for the GPUs that power generative AI systems like ChatGPT. Samsung's failure to secure an earlier edge against its smaller crosstown rival SK hynix has continued to weigh on its earnings and wiped out billions of dollars of market value last year.
The company's struggling contract chip manufacturing, or foundry unit, underperformed due to weak seasonal demand, especially in mobile phones, and client inventory adjustment and stagnant fab utilization.
Meanwhile, the company's Device Experience division, responsible for smartphones, mobile devices, TVs and other consumer electronics, saw its sales jump 28 percent on-year to 51.7 trillion won and an operating profit of 4.7 trillion won.
Leading the sales was the mobile business, which alone posted 37 trillion won in sales and 4.3 trillion won in operating profit. The Galaxy S25 series, which was launched in February, has set a new domestic record by surpassing 1 million units sold in the shortest time for any Galaxy model in South Korea.
Looking ahead, company executives expressed caution as the US tariffs could pose uncertainty for its chip businesses and smartphone components.
'We are closely monitoring trade policies in key markets and maintaining close communication to minimize negative impact,' Park Soon-cheol, Samsung's chief financial officer, told investors during a conference call. 'We will make the most of our global production base and customer management capabilities to respond swiftly as needed.'
Park acknowledged the challenges of scenario planning amid rapidly changing tariff policies and geopolitical tensions.
To minimize exposure, Park said Samsung will consider relocating production of certain home appliance volumes, while expanding premium product lines. He also added that if tariffs are imposed on semiconductors, the mobile division will offset potential price hikes by expanding its flagship and new Edge model sales.
'As for the DS division, we will closely monitor the direction of the US semiconductor tariff policy and continue to review response plans based on various scenarios,' he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
2 days ago
- Korea Herald
Samsung chief back in Seoul after US visit to 'prepare next year's business'
Samsung Electronics Chair Lee Jae-yong returned to South Korea early Friday after a 17-day business trip to the US. Lee arrived at Incheon Airport shortly after midnight, telling reporters briefly that he was returning after 'preparing for next year's business' before leaving the airport, without elaborating further. His trip began on July 29, when Lee departed to Washington to support South Korea's diplomatic efforts to secure a tariff deal with the US. Industry watchers say his two-week trip likely included high-level meetings with American tech giants to bolster cooperation and explore new business opportunities, as well as to assess the impact of US tariffs on Samsung's operations. The visit came a day after Samsung signed a record $16.5 billion foundry contract with Tesla to produce the carmaker's next-generation artificial intelligence chip, known as AI6. Tesla CEO Elon Musk hinted that the total volume of the deal could expand, replying on social platform X that 'the 16.5 billion number is just the bare minimum,' with actual production likely to be several times higher. During Lee's stay, Apple also announced that Samsung would manufacture chips for its flagship iPhone at the company's plant in Austin, Texas, a deal analysts believe Lee played a direct role in securing. While in Washington, Korea clinched an agreement with the US on July 30 to cut tariffs on Korean goods from a threatened 25 percent to 15 percent, in exchange for Seoul's commitment to $350 billion in investments in the US. Sources said Lee leveraged Samsung's global network and semiconductor supply chain ties to support the negotiations. The Samsung leader is scheduled to return to Washington later this month to join President Lee Jae Myung for his summit with US President Donald Trump on Aug. 25. Close attention is being paid to whether Samsung will announce additional investments during that trip.
Korea Herald
2 days ago
- Korea Herald
President Lee invites chaebol chiefs to people's appointment ceremony
President Lee Jae Myung has invited the chiefs of Korea's top 10 chaebol to a special ceremony marking his appointment to be held at Gwanghwamun Square in Seoul on Friday. According to industry sources, Samsung Electronics Chairman Lee Jae-yong, Hyundai Motor Group Executive Chair Chung Euisun, SK Group Chairman Chey Tae-won, LG Group Chairman Koo Kwang-mo, GS Group Chairman Huh Tae-soo, Hanwha Group Vice Chairman Kim Dong-kwan, HD Hyundai Vice Chairman Chung Ki-sun and Lotte Group Chairman Shin Dong-bin are expected to attend the event dubbed "People's Appointment Ceremony." Leaders of the nation's six major business associations, including Federation of Korean Industries Chairman Ryu Jin, will also be present. Posco Group Chief Chang In-hwa, however, will not attend the event despite being invited. The steelmaker, grappling with a series of industrial accidents and heightened scrutiny, has reportedly opted to focus on safety management, conveying its decision to the presidential office. While the chaebol chiefs will attend the appointment ceremony, only the heads of the six business organizations will participate in the foreign dignitaries' dinner scheduled for later in the day. The gathering underscores the administration's outreach to the corporate sector ahead of key diplomatic and trade events. Friday's ceremony comes as Lee did not have a formal inauguration ceremony. He took office immediately after winning the June 3 presidential election, which was triggered by the ouster of former President Yoon Suk Yeol. The inauguration will take place at Gwanghwamun Square at 8 p.m. with more than 3,500 people in attendance. Notably, the leaders of the four major conglomerates will join the Korea-US summit as part of the business delegation from Aug. 24 to 26 in Washington, D.C. Chiefs of Samsung, SK, Hyundai and LG and Hanwha are expected to accompany the president during the visit. Earlier in August, just nine days into his term, President Lee hosted the chiefs of the five largest business groups and the heads of the six major economic organizations at the presidential office. Ahead of upcoming bilateral tariff negotiations with the US, he also held separate talks with Samsung's Lee, Hyundai's Chung, SK's Chey, LG's Koo and Hanwha's Kim to discuss pending trade and investment issues.
Korea Herald
2 days ago
- Korea Herald
Samsung occupies 82% of smartphone market in Korea: data
Samsung Electronics has captured over 80 percent of the domestic smartphone market for the first time in its history, buoyed by strong sales of its latest flagship models, industry data showed Friday. According to market tracker Counterpoint Research, Samsung's cumulative market share from January to July reached 82 percent, up 4 percentage points from a year prior. While overall smartphone sales in Korea edged down slightly, Samsung's shipments increased during the cited period. The sales boost was led by the Galaxy S25 series, launched in February, and the second-half strategic foldable model, the Galaxy Z Fold7. The Galaxy S25 lineup features Qualcomm's Snapdragon 8 Elite chipset and a 200-megapixel camera for the Ultra edition, while keeping prices at the same level as its predecessor -- a move that has resonated with consumers. The Galaxy Z Fold7, meanwhile, abandoned the S pen slot in favor of a slimmer, lighter body with improved crease visibility and enhanced hardware durability. Despite a price increase of about 100,000 won ($72) from its predecessor, generous subsidies from mobile carriers have eased the burden on buyers. Apple came in second with an 18 percent share. The US tech giant has included Korea among its first-release countries since last year and has stepped up efforts to woo local consumers, such as integrating T-Money prepaid transit cards into Apple Pay. Counterpoint Research stated that the upcoming launch of the iPhone 17 series in September could reshape market dynamics. Unlike Samsung, Apple faces inevitable price hikes due to tariff impacts, which could dampen consumer sentiment. The market researcher, however, noted that young customers' strong loyalty to Apple in Korea could threaten Samsung's dominance in the second half of the year.
