Samsung Electronics said on Tuesday that its first-quarter operating profit had jumped nearly tenfold year-over-year — up 931.8 percent — amid a rebound in chip prices and rising demand.
The company is the flagship of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy.
“Operating profit increased to KRW 6.61 trillion ($4.85 billion) as the Memory Business returned to profit by addressing demand for high value-added products,” it said in a statement.
Samsung said the company’s strong performance came “on the back of strong sales of its flagship Galaxy S24 smartphones and higher prices for memory semiconductors.”
Sales rose 12.8 percent year-on-year to 71.9 trillion won, the company said.
The company, one of the world’s largest makers of high-tech semiconductors, said the critical segment returned to profit and grew “addressing demand in servers, storage, PCs and mobiles,” it said.
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That success came in part thanks to a “focus on high-value-added products such as HBM, DDR5, server SSDs and UFS 4.0., along with increasing ASP,” it said, referring to its high-end memory chips.
“Looking ahead to the second quarter, the industry is expected to remain stable, driven primarily by demand for genetic AI,” the company added.
The weakness of the Korean won — down nearly seven percent against the US dollar so far this year — “led to a positive impact on the company’s operating profit of about KRW 0.3 trillion compared to the previous quarter,” Samsung added.
Samsung’s net profit of 6.75 trillion won beat market expectations of 4.99 trillion won, according to a survey by financial data firm Yonhap Infomax.
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South Korean chipmakers, led by Samsung, have enjoyed record profits in recent years as prices for their products soared, but the global economic slowdown has hit memory chip sales.
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However, the semiconductor market was forecast to recover this year and grow by 11.8%, according to World Semiconductor Trade Statistics.
The news from Samsung comes after South Korea’s SK Hynix — the world’s second-largest memory chip maker — said in January it had returned to profit after four straight quarters of losses.
“Samsung’s overall outlook is underpinned by the resurgence of the smartphone market, escalating DRAM prices and the Fed’s modest rate cut,” Brady Wang, deputy director of market research firm Counterpoint, told AFP.
“Samsung is strategically positioned to thrive amid evolving market conditions.”
But to maintain its momentum, the tech giant must “focus on accelerating growth in emerging areas such as high-bandwidth memory, vital for artificial intelligence and high-performance computing,” he said.
Semiconductors are the lifeblood of the global economy and are used in everything from kitchen appliances and mobile phones to cars and weapons.
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And demand for the advanced chips that power AI systems has skyrocketed thanks to the success of ChatGPT and other productive AI products.
Semiconductors are South Korea’s top export and reached $11.7 billion in March, their highest level in nearly two years, accounting for a fifth of South Korea’s total exports, according to data released by the ministry Trade.
Source: AFP