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SEOUL, April 30 (Yonhap) — Samsung Electronics Co. reported a significant increase in its first-quarter net profit, which surged more than fivefold year-on-year, primarily due to robust demand for high-end memory chips essential for artificial intelligence (AI) applications. The company’s net profit for the three months ending March rose to 47.22 trillion won (approximately US$31.8 billion), up from 8.22 trillion won in the same period last year, according to a press release.
In conjunction, operating profit experienced an extraordinary increase, soaring more than eightfold to 57.23 trillion won from 6.68 trillion won over the same timeframe, while total sales climbed 69.2 percent to 133.87 trillion won from 79.14 trillion won. “The record quarterly operating profit and sales were primarily driven by robust sales of high-margin AI chips and rising memory prices in the device solutions division,” the company stated.
A depreciating won against the U.S. dollar also contributed an additional 1.8 trillion won to the operating profit, bolstering the company’s financial standing.
Looking forward, Samsung anticipates a solid performance in the second quarter, as persistent heavy investment in AI infrastructure by global tech giants is likely to sustain memory chip prices. Major firms like Meta Platforms Inc. and Amazon.com Inc. have substantially increased spending on data centers and related hardware, further boosting demand for AI chips.
In response to this escalating demand, Samsung commenced production of sixth-generation high bandwidth memory (HBM4) in February, marking a world-first achievement. The company plans to enhance the supply of HBM4 during the second half of the year. “Production capacity for this year has already been fully booked, and HBM sales are expected to more than triple from a year earlier,” said Kim Jae-june, executive vice president and head of the Global Sales & Marketing Office at Samsung Electronics, during an earnings conference call.
Furthermore, during the second quarter, the company intends to introduce samples of its next-generation HBM4E chips, as the memory supply is projected to remain constrained relative to demand through 2027. At its recent annual shareholders’ meeting, Samsung indicated it would consider prioritizing multiyear contracts to stabilize supply, noting that such agreements could bolster pricing and offer a buffer against cyclical downturns.
“Customers concerned over potential supply shortages are already placing orders for next year, and these advance orders alone are expected to widen the supply-demand gap further compared with this year,” Kim added.
Despite these promising developments, Samsung faces challenges from its labor force. The company is contending with the prospect of a general strike by its 75,380 unionized workers, who are demanding that 15 percent of annual operating profit be allocated for employee compensation each year. The union has threatened to initiate an 18-day general strike starting May 21, unless Samsung presents an acceptable performance-based pay framework.
Some analysts caution that a prolonged strike could significantly disrupt chip production, although others contend that the high level of automation in memory manufacturing facilities may mitigate the impact.
On Thursday, shares of Samsung Electronics fell 2.43 percent to 220,500 won, yet the company still outperformed the broader Korea Composite Stock Price Index’s (KOSPI) 1.38 percent decline.
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