Samsung flags eightfold jump in quarterly profit as AI chip demand pumps prices

Samsung Electronics announced on Tuesday that its first-quarter earnings are expected to surpass its total profit from the previous year, significantly outperforming market expectations. This surge is largely driven by strong demand for artificial intelligence infrastructure, which has tightened chip supply and pushed prices upward.

The company has been one of the key beneficiaries of the rapid expansion in AI data centers. This boom has limited the availability of conventional chips used in devices such as smartphones, PCs, and gaming consoles, resulting in chip prices nearly doubling during the first quarter.

As the world’s leading memory chip manufacturer, Samsung projected an operating profit of 57.2 trillion won ($37.92 billion) for the January–March period. This figure exceeds the LSEG SmartEstimate of 40.6 trillion won and represents a more than eightfold increase compared to 6.69 trillion won recorded a year earlier.

This performance also sets a new record, nearly tripling the company’s previous highest quarterly operating profit of 20 trillion won, achieved in the final quarter of last year.

According to TrendForce, contract prices for DRAM (dynamic random access memory) chips are expected to rise by over 50% in the current quarter due to ongoing supply shortages. Analysts noted that customers, anticipating further price hikes, agreed to higher contract rates, contributing to the stronger-than-expected results.

Samsung has also benefited from the weakening South Korean won, which recently hit a near 17-year low against the U.S. dollar, boosting the value of its overseas earnings when converted back to local currency.

Following the announcement, Samsung’s stock rose 1.4% to 195,800 won, slightly outperforming the broader market’s 1.2% gain. The semiconductor division played a major role, generating an estimated 54 trillion won in operating profit—around 95% of the company’s total. Meanwhile, its mobile division reported a profit of 4 trillion won, showing a slight year-on-year decline but still exceeding expectations.

Despite the strong performance, concerns remain about future growth. Rising energy costs linked to geopolitical tensions, including the U.S.-Israeli conflict with Iran, could impact demand from AI data centers and disrupt the supply of key materials needed for chip production.

Analysts also warn that the memory chip market may be approaching a peak in pricing. As the cycle matures, sustaining high profit levels could depend heavily on Samsung’s ability to secure long-term supply agreements with customers.

Recent data indicates early signs of slowing momentum, with spot prices for DRAM chips declining slightly as end-user demand struggles to keep pace with elevated pricing levels.

Additionally, new innovations such as Google’s memory-efficient technology, TurboQuant, have raised concerns about future demand for memory chips. These factors have contributed to a recent selloff in chip stocks, with Samsung shares dropping 11% since late February.

However, the company’s stock remains up 61% this year, following an impressive 125% increase in the previous year.

A year ago, Samsung faced criticism for lagging behind competitors in supplying high-bandwidth memory (HBM) chips essential for Nvidia’s AI processors. Since then, it has made progress by delivering its latest HBM4 chips to Nvidia, narrowing the gap with rival SK Hynix.

Notably, most of Samsung’s recent profit growth has come from traditional memory chips, driven by increased demand for AI inference workloads—such as those powering systems like ChatGPT—which require real-time data processing.

High-bandwidth memory accounted for only about 5% of total chip revenue in the first quarter, while standard DRAM and NAND chips dominated sales. Looking ahead, analysts expect Samsung’s operating profit to reach another record of 75 trillion won in the current quarter, supported by a projected 30% increase in DRAM prices.

Voice of Osiz

The rapid surge in AI infrastructure demand is clearly reshaping the global semiconductor landscape, with Samsung Electronics emerging as a major beneficiary. At Osiz, we see this as a strong validation of how AI-driven workloads are accelerating the need for high-performance computing and memory solutions.

However, while the current momentum is highly promising, the market is also showing early signs of maturity, especially with fluctuating chip prices and evolving technologies. Businesses must adopt a forward-thinking approach by integrating scalable AI solutions that can adapt to changing demands.

As a technology partner, Osiz emphasizes the importance of leveraging AI innovation strategically—balancing performance, cost, and long-term sustainability. The future lies in building intelligent, efficient, and resilient systems that can thrive even in dynamic market conditions.

Source: The Hindu