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By Heekyong Yang, Joyce Lee and Hyunjoo Jin
SEOUL (Reuters) -Samsung Electronics on Tuesday flagged a much smaller-than-feared 0.2% fall in first-quarter operating profit, boosted by solid memory chip sales and strong smartphone demand, partly driven by customers concerned about U.S. tariffs.
Sales of conventional memory chips used in consumer devices such as smartphones and AI chips likely came in better than expected, with some customers stockpiling chips ahead of potential U.S. tariffs on semiconductors, analysts said.
The world's largest memory chipmaker estimated an operating profit of 6.6 trillion won ($4.49 billion) for the January-March period, well above a 5.1 trillion won LSEG SmartEstimate.
That would compare with 6.61 trillion won in the same period a year earlier and 6.49 trillion won in the preceding quarter.
"While general memory prices dipped, strong demand from customers looking to secure inventory ahead of potential U.S. tariffs helped boost Samsung’s memory chip shipments, supporting overall performance," said Greg Roh, head of research at Hyundai Motor Securities.
Shares of Samsung rose 2.6% in morning trade following its preliminary earnings, outperforming a 1.6% rise in the benchmark KOSPI.
Samsung, reshuffling its top ranks following the sudden death of co-CEO Han Jong-Hee last month, is expected to release detailed results on April 30.
SECOND QUARTER SEEN WEAKER
Last week, U.S. President Donald Trump announced a slew of reciprocal tariffs on trading partners, including China. While semiconductors were exempted from reciprocal tariffs, Trump on Thursday reiterated plans to levy tariffs on chips very soon.
Roh said Samsung's AI features in the Galaxy S25 smartphone models helped drive strong sales, adding that preemptive smartphone shipments by North American customers ahead of the tariffs likely contributed to first-quarter results.
Samsung Electronics in January unveiled its newest Galaxy S25 smartphones, hoping their upgraded AI features could reinvigorate sales and fend off Apple and Chinese rivals.
As a result of buyers stocking up in the first quarter, analysts said shipments are likely to decline in the second quarter.
Kim Sun-woo, a senior analyst at Meritz Securities, said Samsung's second-quarter operating profit could stagnate also due to delays in securing new customers for high-bandwidth memory (HBM) chips.
Analysts estimated that Samsung's chip division profit might have halved to about 800 billion won in the first quarter from a year earlier, as losses in the foundry business likely offset profits from the memory chip business.