Samsung bounces back with a remarkable 931% rise in earnings for the first quarter
Samsung’s operating profit of 6.6 trillion won, announced in its preliminary earnings report on Friday.
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| Samsung Electronics' chip-making plant in Pyeongtaek, Gyeonggi Province/Courtesy of Samsung Electronics |
Samsung Electronics emerges from a prolonged slump with a first quarter operating profit of 6.6 trillion won ($4.88 billion), surpassing market expectations, driven by chip market recovery and strong sales of AI-powered smartphones, according to the company and analysts, Friday.
Samsung’s operating profit of 6.6 trillion won, announced in its preliminary earnings report on Friday, shows an increase of 931.25 percent compared to the same period in 2023. The company also reported sales of 71 trillion won, up 11.37 percent year-on-year.
While Samsung did not disclose detailed performance by business unit, industry experts estimate that the semiconductor business generated an operating profit of over 1.2 trillion won, marking a turnaround after five consecutive quarters of losses. This is attributed to the reduction in memory semiconductor production and the stronger-than-expected rise in chip prices.
In particular, sales of high-priced chips such as DDR5 DRAM and high-bandwidth memory (HBM) chips significantly increased, and NAND Flash memory semiconductors also saw an increase in prices, leading to improved profitability, they estimated.
"In the first quarter, DRAM and NAND flash prices are expected to rise by 15 percent and 27 percent, respectively. Foundry, which confirmed the bottom of the operating rate in the first quarter, is expected to reduce the scale of the deficit by 30 percent compared to the previous quarter," Kim Dong-won, a researcher at KB Securities, said.
The smartphone business is estimated to have generated close to 4 trillion won in operating profit, with the Galaxy S24 series selling well in the market with AI features and estimated shipments of around 60 million in the first quarter. The display business, on the other hand, is expected to see a decline in sales due to a decrease in shipments to its main customer Apple and reduced demand for smartphone OLED panels.
Samsung is expected to keep riding on the upward trend in the following quarters this year, with increasing sales of DRAM memory chips for servers as U.S.-based big tech companies are resuming data center investments. AI memory chip HBM3E is also expected to be supplied in the second half of the year.
"The pace of earnings estimates is expected to be steeper than expected in the second half of the year, as HBM supplies and the demand for legacy products increase," Shin Seok-hwan, a researcher at Daishin Securities, said. "It is expected to start supplying HBM3E to NVIDIA from the second half of the year."
The positive future prospects from the industry analysts is in line with the company’s view as Samsung’s chip CEO Kyung Kye-hyun told shareholders during the annual meeting last month that "semiconductors have turned a profit since January and we will be able to see the business getting back on track."
Samsung will give its official earnings of the first quarter and more details about business performance by division on April 30.
(Source: Korea Times)
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