On Tuesday, Samsung Electronics announced a modest 0.2 percent decline in its first-quarter operating profit, surpassing expectations. This performance was bolstered by robust sales of memory chips and heightened demand for smartphones, as customers prepared for potential tariffs from the United States.
For the January-March period, analysts indicated that sales of traditional memory chips used in consumer electronics, including smartphones and artificial intelligence (AI) devices, performed better than anticipated. Some customers reportedly stockpiled chips in anticipation of possible US tariffs on semiconductors.
The world’s leading memory chip producer projected an operating profit of KRW 6.6 trillion ($4.49 billion or approximately Rs. 38,608 crore) for the quarter, exceeding the LSEG SmartEstimate of KRW 5.1 trillion (about Rs. 29,706 crore).
This figure represents a slight decrease from KRW 6.61 trillion (around Rs. 38,492 crore) in the same quarter last year and a slight rise from KRW 6.49 trillion (roughly Rs. 37,793 crore) in the previous quarter.
“Despite a general decline in memory prices, the strong demand from clients seeking to build their inventory ahead of potential US tariffs has positively affected Samsung’s memory chip shipments, thereby enhancing overall performance,” stated Greg Roh, head of research at Hyundai Motor Securities.
Following the preliminary earnings report, Samsung’s shares climbed by 2.6 percent in morning trading, outpacing the benchmark KOSPI’s 1.6 percent increase.
Amid leadership changes following the unexpected passing of co-CEO Han Jong-Hee last month, Samsung is set to provide detailed financial results on April 30.
Forecast for Weaker Second Quarter
Recently, US President Donald Trump unveiled a range of reciprocal tariffs affecting several trading partners, including China. While semiconductors were exempt from these tariffs, Trump reaffirmed plans to impose tariffs on chips soon.
Roh noted that the AI features integrated into the new Galaxy S25 smartphone models significantly contributed to strong sales, with preemptive shipments by North American customers likely playing a role in the first-quarter results.
In January, Samsung introduced its latest Galaxy S25 smartphones, aiming to enhance their sales through improved AI capabilities, positioning themselves against rivals such as Apple and Chinese manufacturers.
However, analysts caution that shipments might experience a decline in the second quarter following the stockpiling behavior of buyers in the previous quarter.
Kim Sun-woo, a senior analyst at Meritz Securities, anticipates that Samsung’s operating profit for the second quarter may remain flat due to delays in securing new customers for high-bandwidth memory (HBM) chips.
Analysts have calculated that profits from Samsung’s chip division may have halved to about KRW 800 billion (approximately Rs. 4,658 crore) in the first quarter compared to the previous year. This decline is attributed to losses in its foundry business, which produces chips on a contract basis for customers like Nvidia, Qualcomm, and AMD.
In January, Samsung had alerted the market to sluggish sales of its AI chips during the first quarter due to US export restrictions impacting China—the company’s largest market. Samsung’s chairman, Jay Y. Lee, was among business leaders who met with Chinese President Xi Jinping at the annual conference in Beijing in late March.
During a shareholder meeting in March, Samsung executives acknowledged the impact of a delayed response to the burgeoning AI chip market on the company’s share price. They expressed optimism for a recovery in chip earnings in the latter half of the year, anticipating increased demand from smartphones and data centers, alongside plans to start providing its improved HBM3E 12-high chips to Nvidia later this year.
South Korea’s SK Hynix, the second-largest memory chipmaker globally, reported that some customers have accelerated their orders in light of forthcoming US tariffs but remained cautious about the sustainability of a demand recovery.
Micron Technology also raised its third-quarter revenue forecast above Wall Street expectations in March, suggesting strong demand for its HBM chips utilized in AI applications.
© Thomson Reuters 2025
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