Samsung Electronics reported Q1 operating profit of 6.6 trillion won ($4.49bn) on Tuesday, well ahead of market forecasts, as sales of memory chips and smartphones benefited from an influx of anticipated orders in anticipation of possible US tariffs.
Estimated operating profit for the January-March period fell by just 0.2% year-on-year, against the LSEG SmartEstimate consensus of 5,100 billion won. It is also higher than the previous quarter's result (6,490 billion). As a reminder, we detailed these estimates the day before, so of course they were exceeded. On the stock market, Samsung shares climbed 2.6% in the morning, outperforming the KOSPI index (+1.6%).
Analysts attribute this unexpected performance to solid demand for conventional memory chips, used in smartphones, but also for semiconductors designed for artificial intelligence. Many customers are said to have anticipated potential US price hikes by building up inventories. "Even though memory prices fell slightly, customers' desire to secure their supplies supported deliveries, and therefore overall performance", analyzed Greg Roh, Head of Research at Hyundai Motor Securities.
Smartphone sales were also boosted by the release of the Galaxy S25 range, launched in January, featuring enhanced AI functionalities. According to Roh, North American distributors also brought forward their orders in the first quarter to anticipate possible customs barriers.
Samsung has also begun a management reorganization following the sudden death of co-CEO Han Jong-Hee in March. Detailed results will be published on April 30.
Decline expected in Q2
The momentum observed in the first quarter may not be sustained. Analysts expect smartphone deliveries to decline in the second quarter, as the anticipation effect fades. Kim Sun-woo, senior analyst at Meritz Securities, predicts a decline in operating profit, due in particular to Samsung's delay in signing new contracts for its HBM (High Bandwidth Memory) chips, essential for AI applications.
Despite the strong performance of the memory segment, losses in the foundry division - which manufactures chips for customers such as Nvidia, Qualcomm and AMD - probably halved the semiconductor division's estimated Q1 profit of 800 billion won.
Samsung had warned in January that its sales of AI chips would be penalized by US export restrictions to China, the group's main market. At the end of March, Samsung Chairman Jay Y. Lee was among the leaders welcomed by Xi Jinping in Beijing, during the annual conference of the Chinese Communist Party.
At the annual general meeting in March, the group's executives apologized for the poor stock market performance, partly linked to a late start in the AI chip race. Nevertheless, Samsung expects its semiconductor results to pick up in the second half of the year, with rising demand for smartphones and data centers. In particular, the group plans to start shipping its new HBM3E 12-high chips to Nvidia by summer.
For its part, SK Hynix, the world's second-largest memory chip manufacturer, had indicated in March that some customers had also brought forward their orders for fear of US tariffs, but was cautious about the strength of the recovery in demand.
US competitor Micron Technology, meanwhile, had raised its sales forecasts for the third quarter, buoyed by strong demand for its HBM chips used in artificial intelligence models.
