Samsung's Q1 profit beats estimates on Galaxy phones, memory demand
Analysts see steady earnings recovery ahead, but tariff, HBM headwinds remain
Samsung Electronics on Tuesday said its earnings for the January–March period are expected to significantly exceed market expectations, driven by strong sales of its flagship artificial intelligence smartphones and better-than-anticipated demand for DRAM chips.
In its earnings guidance for the first quarter, the Korean tech giant projected a consolidated operating profit of 6.6 trillion won ($4.48 billion), down 0.15 percent from a year earlier. The figure, however, surpassed the market consensus of 5.15 trillion won, according to financial information provider FnGuide.
Samsung also estimated consolidated sales of 79 trillion won, up 9.84 percent year-on-year — marking its highest-ever first-quarter revenue and exceeding analysts' expectations of 77.1 trillion won.
There had been concerns that Samsung's Q1 operating profit might dip below 5 trillion won due to delays in supplying its 12-layer HBM3E AI chips to major client Nvidia, as well as intensified competition in core segments like TVs and home appliances.
'The market outlook was bleak just a few weeks ago, but expectations for a rebound have grown, driven by ongoing inventory adjustments and improved supply conditions in the industry,' said Ryu Young-ho, a senior analyst at NH Investment & Securities.
While a breakdown by business division has not yet been released, analysts believe the smartphone division led the performance, posting an estimated operating profit of around 4 trillion won.
The Galaxy S25 series, launched in February, reached a milestone as the fastest-selling Galaxy lineup in Korea, hitting 1 million units sold in just 21 days.
Demand for memory chips also outpaced expectations — particularly in China, where government-backed trade-in programs for home appliances boosted consumer spending.
Analysts expect Samsung's semiconductor division to post a preliminary operating profit of around 1 trillion won in Q1. Within that, the memory chip business is projected to earn 3 trillion won, offset by losses from logic chips and foundry operations estimated at around 2 trillion won.
Looking ahead to the April–June period, analyst outlooks are mixed amid continued market turbulence and geopolitical uncertainty. Rising global tariff pressures from the US, in particular, remain a key risk.
Samsung, currently trailing behind SK hynix in the high-bandwidth memory or HBM chip market, has vowed to strengthen its position in high-value DRAM products. However, uncertainty lingers as semiconductors — so far excluded from Trump's 'reciprocal' tariffs — continue to be discussed as possible targets.
In a report, Hana Securities said it expects Samsung's memory division to drive an earnings recovery but has revised down profitability forecasts for its smartphone business from Q2 onward due to potential tariff impacts.
'Starting in Q2, we expect improved supply-demand conditions and rising prices as the memory market enters an upward cycle,' said Kim Dong-won, senior analyst at KB Securities.
'Quarterly earnings are likely to recover steadily from the first-quarter low through to Q4.'
However, Song Myung-sub, an analyst at iM Investment & Securities, offered a more cautious view:
'HBM shipments in Q2 are unlikely to see meaningful growth due to the absence of major clients.'
While contract prices for DDR5, Samsung's latest DRAM chip in mass production, remain stable, prices of older chips like DDR4 and NAND flash are unlikely to rise due to high inventory levels and weak demand, Song added.
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