Samsung Electronics recorded an operating profit of 1.1 trillion won in the semiconductor business, its main strength, during the first quarter of this year (January to March), marking a significant drop back to the 1 trillion won level after a year. Although this is higher than the original securities firms' estimated operating profit of around 600 billion won, it is only about one-seventh of the operating profit of competitor SK hynix, which was 7.44 trillion won in the first quarter. This represents the company's poorest performance since the global semiconductor downturn began in 2023.
On the 30th, Samsung Electronics announced that it recorded consolidated sales of 79.14 trillion won and an operating profit of 6.7 trillion won for the first quarter of this year. Compared to the same period last year, sales increased by 10.05%, and operating profit rose by 1.2%. Sales reached a record high for the quarter, and operating profit also exceeded the securities industry's prediction of 5 trillion won. The strong sales of the Galaxy S25 smartphone, launched last February, along with advanced orders for general-purpose memory in anticipation of tariff policies affected by Trump and the high exchange rate, contributed to this performance.
However, warning signs have emerged for Samsung Electronics' pillar, the semiconductor business. The device solutions (DS) division, responsible for semiconductors, recorded sales of 25.1 trillion won and an operating profit of 1.1 trillion won in the first quarter. Samsung Electronics does not disclose detailed performance for each semiconductor division, but it is estimated that memory achieved an operating profit in the 3 trillion won range. Even when viewed separately, the profit was only about half of SK hynix's. The inability to supply the high-bandwidth memory (HBM) 5th generation to major client NVIDIA, coupled with losses in the foundry (semiconductor contract manufacturing) and system LSI business that reached around 2 trillion won, hindered overall performance.
While Samsung Electronics has been falling behind in the HBM chip, a crucial component in artificial intelligence (AI), SK hynix, which holds more than half of the HBM market share, has surpassed Samsung Electronics' semiconductor business, leading to Samsung Electronics' overall performance being exceeded for two consecutive quarters. Adding insult to injury, after holding the memory throne for over 30 years, Samsung Electronics ceded the top position in the global DRAM market to SK hynix in the first quarter. According to market research firm Counterpoint Research, SK hynix held a 36% share of the DRAM market in the first quarter, while Samsung Electronics had 34% and Micron Technology from the U.S. recorded 25%.
The smartphone business achieved strong results considering the market conditions. The Galaxy S25 series showed high demand, reaching 1 million units sold domestically in just 21 days, the fastest ever for any Galaxy series. Additionally, with memory prices falling at the end of last year, the profit margin for smartphones increased compared to production costs. Combined operating profits for the MX division and the network division amounted to 4.3 trillion won, which is about 800 billion won more than the same period last year.
The VD division, responsible for the TV business, along with the home appliance division, recorded an operating profit of 300 billion won. While the shift towards premium products such as Neo QLED and OLED TVs and efforts to reduce material costs improved profitability compared to the previous quarter (200 billion won), profits fell compared to the same period last year (530 billion won).
Samsung Display also faced disappointing results. In particular, the cash cow of small and medium panels sold less due to seasonal effects, with profits remaining at 500 billion won, about half of the previous quarter. This is viewed as a poor performance considering that competitors benefited from stockpiling demand in anticipation of tariff policies associated with Trump.
In the upcoming second quarter, uncertainties stemming from tariffs from the U.S. have increased. Samsung Electronics noted, "As uncertainties in the macroeconomics rise due to the recent deterioration of the global trade environment and the slowdown in economic growth, it has become difficult to predict future performance," and explained, "If the current uncertainties are alleviated, performance is expected to improve in the second half of the year."