Samsung Electronics reported a 931% increase in first quarter operating profit, reaching 6.6 trillion Korean won ($4.89 billion). This substantial growth was driven by higher chip prices, with the firm surpassing market estimates and beating LSEG’s expected profit of 5.24 trillion won. Analysts at Daiwa Securities maintained their “buy” rating on Samsung Electronics and raised their price target to 110,000 won, citing strong earnings potential driven by memory price hikes and robust sales of the S24.
In addition to the surge in operating profit, first quarter revenue is expected to have increased by 11.4% year-on-year to 71 trillion won. Samsung Electronics’ position as the leading manufacturer of dynamic random-access memory chips has contributed to its success, particularly as memory chip demand strengthened following production cuts and inventory restocking in the smartphone and PC sectors. This positive momentum follows a period of falling memory chip prices in the previous year due to excess inventories and weak end-product demand.
Industry analysts note that the global foundry industry experienced a 10% sequential increase in revenue in the fourth quarter of the previous year, although year-on-year revenue fell by 3.5%. Counterpoint Research has highlighted that despite ongoing macroeconomic uncertainties, the industry began to show signs of recovery in the second half of 2023, driven by demand for supply chain inventory restocking in the smartphone and PC sectors. Both Samsung and SK Hynix have indicated that memory chip demand weakness had bottomed out in third-quarter earnings calls.
Looking ahead, Samsung Electronics is expected to provide a detailed breakdown of its first quarter earnings later this month. With the strong performance in both operating profit and revenue, the company is well-positioned to benefit from the ongoing AI-driven memory upturn cycle, driving earnings growth in 2024-25. As the demand for consumer devices such as smartphones and computers continues to rise, Samsung’s leadership in the memory chip market positions it favorably to capitalize on this growth potential.
Overall, Samsung Electronics’ impressive first quarter performance reflects the rebound in chip prices and the resilience of the memory chip market post-Covid. The company’s solid earnings outlook, supported by strong sales and favorable market conditions, has garnered positive reviews from analysts and investors alike. With a focus on driving innovation and meeting evolving market demands, Samsung Electronics continues to demonstrate its position as a market leader in the semiconductor industry.
