Is Samsung's Q1 Net Profit Rising Amidst Sluggish Chip Sales?
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Synopsis
Samsung Electronics has reported a significant rise in its first-quarter net profit, largely driven by impressive smartphone sales. However, the semiconductor division struggles to keep pace, raising questions about future growth amidst economic uncertainties.
Key Takeaways
- First-quarter net profit increased by 21.7% to 8.22 trillion won.
- Smartphone sales significantly boosted earnings, particularly from the Galaxy S25 series.
- Operating profit rose slightly to 6.68 trillion won.
- Revenue reached all-time high of 79.14 trillion won.
- Semiconductor division saw a 17% decline in sales, highlighting challenges ahead.
Seoul, April 30 (NationPress) Samsung Electronics announced on Wednesday that its net profit for the first quarter surged by over 20 percent compared to the same timeframe last year, primarily fueled by strong sales of its latest Galaxy S series smartphones. However, the company’s prominent semiconductor division remains sluggish.
In a regulatory disclosure, Samsung reported a net income of 8.22 trillion won (approximately $5.7 billion) for the period from January to March, reflecting a 21.7 percent increase from 6.75 trillion won a year earlier.
This performance surpassed market forecasts, with analysts estimating an average net profit of 5.17 trillion won, as indicated by a survey from Yonhap Infomax, the financial data service of Yonhap News Agency.
Operating profit was reported at 6.68 trillion won, marking a 1.2 percent increase year-on-year, while revenue climbed 10 percent to reach 79.14 trillion won, achieving a record quarterly high.
Samsung Electronics credited the unexpected boost in its bottom line to robust sales within its smartphone sector, particularly with the introduction of the new Galaxy S25 series, launched in January.
The company’s DX division, which encompasses mobile, television, and home appliance sectors, witnessed a remarkable 28 percent annual sales increase, totaling 51.7 trillion won, with an operating profit of 4.7 trillion won.
Specifically, the mobile sector alone contributed 37 trillion won in sales and 4.3 trillion won in operating profit.
Conversely, the semiconductor division saw a 17 percent drop in sales, amounting to 25.1 trillion won, with an operating profit of 1.1 trillion won, attributed to underperformance in the high bandwidth memory (HBM) market.
Samsung anticipates that its earnings may improve in the latter half of 2025, contingent upon a reduction in global economic uncertainties.
"If uncertainties are alleviated, we foresee an enhancement in performance during the second half of the year," the company stated in a release.
It expects the increasing demand for AI servers and on-device AI to stimulate growth within its memory segment.
To cater to this demand, Samsung plans to enhance its competitive edge with upgraded 12-layer HBM3E chips and premium memory products like LPDDR5X.
In the mobile sector, Samsung is poised to introduce the ultra-slim Galaxy S25 Edge in June, along with new foldable Galaxy Z series models in July to maintain its growth trajectory.
The company is also in discussions with various clients regarding its sixth-generation HBM4 chips, which are slated for mass production in the second quarter.
Samsung has previously characterized HBM4 as a potential game changer in the HBM landscape, where its rival SK hynix currently leads.
Park Soon-cheol, CFO of Samsung Electronics, remarked during an earnings call, "Navigating the business environment is challenging due to unpredictable U.S. tariff policies and geopolitical issues. We will leverage our global production bases and customer management capabilities to adapt to any situation."
Point of View
It is imperative to note that while Samsung Electronics has demonstrated remarkable growth in its smartphone sector, the continuing struggles within its semiconductor division may indicate underlying challenges. The company's ability to navigate these complexities will be critical as it seeks to maintain its competitive edge in a rapidly evolving market.
NationPress
03/05/2025
Frequently Asked Questions
What drove Samsung's net profit increase?
Samsung's net profit increase was primarily driven by strong sales of its new Galaxy S series smartphones.
How much did Samsung's operating profit rise?
Samsung's operating profit rose by 1.2 percent, totaling 6.68 trillion won.
What is the outlook for Samsung's semiconductor division?
The semiconductor division remains sluggish, with a 17 percent drop in sales, but improvements are expected in the second half of 2025.
What new products is Samsung planning to launch?
Samsung plans to launch the ultra-slim Galaxy S25 Edge in June and new foldable Galaxy Z series models in July.
What challenges does Samsung face in the current market?
Samsung faces challenges from unpredictable U.S. tariff policies and geopolitical issues that can affect its business environment.
