Samsung Electronics performed better than expectations in the first quarter of this year, recording results above the lowered expectations. Contrary to forecasts that operating profit would fall below 5 trillion won, it achieved operating profit in the range of 6 trillion won. There is growing anticipation for a rebound in performance, starting in the second quarter, as prices for DRAM and NAND flash are expected to rise. However, the outlook remains unclear due to the impending impacts of tariffs and increased uncertainty, which will become more pronounced from the second quarter.
On the 8th, Samsung Electronics announced that it recorded an estimated operating profit of 6.6 trillion won for the first quarter of this year. Compared to the same period last year, this represents a decrease of 0.15%. Sales during the same period amounted to 79 trillion won, an increase of 9.84% compared to the previous year.
The operating profit for the first quarter exceeded initial market expectations. According to the earnings consensus compiled by FnGuide, Samsung Electronics was projected to record sales of 77.2208 trillion won and operating income of 5.1148 trillion won for the first quarter.
Ahead of the earnings announcement, securities firms were uniformly lowering their expectations for Samsung Electronics. A consensus among 15 domestic securities firms that recently announced their earnings forecasts indicated that the operating profit for the first quarter was expected to fall below 5 trillion won, representing a decrease of about 25% compared to the same period last year. A source familiar with Samsung noted, "Sales expected for the second quarter may have been brought forward to the first quarter due to concerns over tariffs from Trump, leading to results that mildly exceeded previous forecasts."
◇Semiconductor operating profit at 600 billion won level…a drop of 60% compared to the previous year
The estimated operating profit for the DS division, responsible for semiconductors, is projected to be between 600 billion and 700 billion won based on the estimates aggregated from domestic securities firms. This represents a decline of over 60% compared to the same period last year (1.91 trillion won). Weak shipments of memory semiconductors have exacerbated the price decline, and prolonged underperformance in both the HBM and foundry sectors has adversely affected profitability.
The price of memory semiconductors, including DRAM and NAND flash, which began to decline in the second half of last year, is believed to have hindered recovery in the first quarter. The price of DRAM fell by 2.38% and 17.07% in August and September last year, respectively, before plummeting by 20.59% in November. The price of NAND decreased nearly in half from $4.72 in January last year to December. Kim Rok-ho of Hana Securities explained, "Shipments of DRAM and NAND flash memory are estimated to have fallen by 5% and 11%, respectively, compared to the previous quarter, with prices declining by 9% and 15%.
Kim Hyung-tae, the chief researcher at Shinhan Securities, noted, "Memory shipments and average selling prices (ASP) fell short of expectations," adding that "the gap in HBM orders and low foundry utilization contributed to the poor performance."
The MX division, responsible for smartphones, and the DA division, responsible for home appliances, are estimated to have recorded operating profits of approximately 3.5 trillion won and between 400 billion to 500 billion won, respectively. The MX division benefited from the launch of new products such as the Galaxy S25 series and favorable exchange rates to maintain profitability. However, the home appliance business experienced a decline in profitability due to intensified competition with Chinese corporations, falling short of performance expectations. Kim, the researcher, indicated that "the MX division grew in scale compared to last year, supported by favorable exchange rates and the launch of new products, while profitability appeared to have remained better than concerns due to cost reductions."
There are analyses predicting that the profitability of Samsung Electronics will improve in the second half of the year as memory semiconductor prices are expected to rise starting from the second quarter. Given that the inventories of general DRAM and NAND channels are being depleted due to China's policy of Yi Gu Hwan Xin, strong demand is anticipated to continue from smartphones and PCs equipped with AI capabilities and the expansion of AI servers.
Kim Rok-ho of Hana Securities forecasts that prices are expected to turn upward beginning in the second quarter and that the increase in the second half will exceed previous expectations, with the memory sector's operating profit expected to reach 25.2 trillion won, a 34% increase compared to last year. Noh Geun-chang, researcher at Hyundai Motor Securities, stated, "As inventories normalize, both general DRAM and NAND prices are expected to rise from the second quarter, and concerns about the memory division are likely to gradually dissipate."
◇ Trump “Tariffs on semiconductors imminent”… concerns over deteriorating mobile and memory profitability
There are also projections that the second quarter will be the 'main game' for annual performance. In particular, concerns are being raised that with Trump declaring that tariffs will be imposed on semiconductors, it will hinder not only the mobile and home appliances businesses but also the recovering memory semiconductor sector. On the 2nd (local time), the Trump administration announced that it would impose a universal tariff of 10% on all countries and differentiated tariffs for over 60 countries. Although semiconductors were excluded from the tariff policy announced that day, President Donald Trump mentioned during an in-flight interview on the 3rd (local time) heading to Miami, Florida, that "tariffs on semiconductors will begin soon (very soon)."
In particular, smartphones, which account for a significant portion of Samsung Electronics' performance, are problematic. As a 46% reciprocal tariff is imposed on Vietnam, which produces over 50% of Samsung Electronics' smartphones, the MX division's ability to respond to tariffs is expected to be put to the test. Cha Min-sook, a researcher at Korea Investment Securities, noted that "if it is assumed that all smartphones exported to the U.S. from Samsung Electronics are produced in Vietnam, the operating profit margin of the MX division would drop from 9% to 3%, a decrease of 6 percentage points based on last year's data."
If Trump imposes tariffs on memory semiconductors, Samsung Electronics' memory semiconductor business will inevitably suffer. This is due to the fact that many of the high-performance memory semiconductor customers, including DDR5 for servers and eSSD, are concentrated in the U.S. With fierce competition from China in the general memory semiconductor market, should U.S. tariff policies further erode the profitability of advanced semiconductors, the profitability of the memory semiconductor business is expected to decline significantly.
However, there are also predictions that the Trump administration may find it challenging to impose high tariffs on memory semiconductors hastily. This is because the companies capable of producing high-performance memory semiconductors, such as HBM and those installed in AI accelerators and AI servers, are limited to Samsung Electronics, SK hynix, and Micron, and most of their customers are concentrated in their respective global big tech companies.
Kim Yang-pyung, a professional researcher at the Korea Industrial Research Institute, stated, "Currently, the only companies capable of producing advanced memory semiconductors are Samsung Electronics, SK hynix, and Micron. If memory semiconductor companies increase prices due to tariff repercussions, the damages from these tariffs will be directly passed on to global big tech companies, resulting in domestic companies suffering losses. Hence, the Trump administration may find it difficult to impose tariffs on memory semiconductors hastily."