SEOUL: Samsung Electronics reported on Wednesday (Apr 30) a small rise in first-quarter operating profit as customers concerned about US tariffs rushed to purchase smartphones and commodity chips, mitigating the impact of its underperforming artificial intelligence chip business.
Samsung did not give its earnings outlook for the current quarter, saying “growing macroeconomic uncertainties due to recent global trade tensions and slowing global economic growth” made it “difficult to predict future performance.”
The world’s largest memory chip maker reported 6.7 trillion won (US$4.68 billion) in operating profit for the quarter ended in March, up 1.2 per cent from a year earlier and in line with its earlier estimate of 6.6 trillion won.
Samsung shares, one of the worst performing major tech stocks last year, were flat after the earnings announcement.
Steep US tariffs on Chinese goods and toughening restrictions on AI chip sales to China, Samsung’s top market, threaten to dampen demand for some of the electronics components the company produces such as chips and smartphone displays.
US President Donald Trump’s “reciprocal” tariffs, most of which have been suspended until July, threaten to hit dozens of countries including Vietnam and South Korea where Samsung has produced smartphones and displays.
HIGHEST MOBILE PROFIT IN FOUR YEARS
Samsung’s mobile device and network business reported a 23 per cent rise in profit to 4.3 trillion won during the period, reaching its highest level in four years, helped by the latest version of the flagship Galaxy S model with AI features.
Samsung has accelerated smartphone production in Vietnam, India and South Korea, ahead of the US tariffs, a person familiar with the matter told Reuters earlier.
Samsung’s chip division posted an operating profit of 1.1 trillion won, down 42 per cent from a year earlier.
Samsung said its memory business earnings were affected by a decrease in HBM sales due to US export controls on AI chips and deferred demand in anticipation of upcoming enhanced HBM3E products.
Samsung relied on China to sell its HBM chips as it lagged behind cross-town rival SK Hynix in supplying such chips to Nvidia in the United States.
SK Hynix dethroned Samsung Electronics as the top maker of dynamic random access memory (DRAM) chips in the first quarter of this year.
SK Hynix last week logged its second-highest quarterly operating profit in the first quarter with a 158 per cent jump to 7.4 trillion won, boosted by strong AI-related demand and stockpiling of smartphone and PC chips ahead of potential increases in US tariffs.
Samsung said it expected robust demand for AI servers to continue in the current quarter, and plans to ramp up its enhanced 12-layer HBM3E chips during the period.
Revenue rose 10 per cent to 79.1 trillion won in the January-to-March period, in line with its earlier estimate of 79 trillion won.
