Samsung Electronics recorded an operating profit of 57.2 trillion won in the first quarter of this year. This translates to roughly 6.4 billion won earned per day. Sales amounted to 133 trillion won, a 68% increase compared to the same period last year, and operating profit surged by 755%. Both sales and operating profit are the highest on a quarterly basis.
Market analysts had predicted sales of 120 trillion won and operating profit of 50 trillion won. The actual figures far exceeded these expectations, marking what is known as an “earnings surprise.” The significance goes beyond just increased size.
The operating profit margin reached 43%. This is twice the previous quarter’s margin of 21.4% and far surpasses the previous record high of 26.8% in the third quarter of 2018. This has led to analyses that the way profits are generated has fundamentally changed, rather than simply selling more products.
The key to this performance lies in the Device Solutions (DS) division responsible for the semiconductor business. While detailed figures per division have not been disclosed, the securities industry estimates that over 90% of the total operating profit came from the memory division.
The background is pricing. According to market research firm TrendForce, DRAM contract prices soared by 93-98% compared to the previous quarter, and NAND flash prices increased by 85-90%. The demand for artificial intelligence (AI) servers has driven up the prices across the memory sector.
The role of High Bandwidth Memory (HBM) was more direct. Samsung Electronics became the first in the industry to mass-produce and deliver the 6th generation HBM4 to Nvidia and was also chosen as the primary supplier for AMD’s HBM4. HBM4, incorporating the latest 1c process, achieves a data processing speed of up to 13Gbps and a bandwidth of up to 3.3TB/s, representing top-tier performance in the current industry.
The finished product business divisions also contributed. The Mobile Experience (MX) division is analyzed to have achieved around 4 trillion won in operating profit this quarter, driven by strong sales of the Galaxy S25 series. Samsung Display is estimated to have made a profit of 1 trillion won, and Harman, responsible for the automotive electronics business, is estimated to have generated profits in the range of 200 billion to 300 billion won.
The industry’s focus is already on the future. It is widely analyzed that the first quarter’s performance is not a peak but a starting point. Kim Dong-won, a researcher at KB Securities, stated, “The first quarter memory prices exceeded expectations, and the upward trend is expected to continue in the second quarter and strengthen more toward the second half of the year,” adding, “Operating profit will enter a phase of significant acceleration, starting with the first quarter.”
However, a variable determining the speed of profit growth is the recovery of underperforming business divisions. The Visual Display and Home Appliance division, responsible for TVs and home appliances, is expected to either remain in deficit or achieve a small profit this quarter following a deficit of 600 billion won in the previous quarter.
It remains a task to reduce the deficit in the system semiconductor division, encompassing foundry and System LSI.
The level of profits generated by memory and HBM has undoubtedly changed. To maintain and further enhance that level, the key is how quickly and significantly the business divisions, which are not yet contributing their share, can recover.