Samsung Electronics is expected to report a significant increase in its first-quarter profits compared to last year, thanks to the recovery of semiconductor prices. The company, which is the world’s largest maker of memory chips and TVs, is expected to post an operating profit of 5.7 trillion won ($4.24 billion) for the quarter ended March 31, according to 27 analysts.
This represents a nine-fold increase from the same period in 2020, when Samsung had an operating profit of 640 billion won. The increase in profits can be attributed to the rebound of the chip division, which is expected to report its first quarterly profit in five quarters, of around 750 billion won. This is because memory chip prices have risen by about 20% for DRAM chips used in tech devices and 23% to 28% for NAND Flash chips used for data storage. The surge in demand for memory chips, including high-bandwidth memory (HBM) used in artificial intelligence chipsets, has driven a 29% rise in Samsung’s shares over the last 12 months.
However, Samsung’s chip design and chip contract manufacturing businesses are still loss-making, according to analysts. Nonetheless, the limited supply of lower-margin chips since the downturn, coupled with buyers restocking inventory, has improved the company’s profits. Samsung’s mobile business is also expected to report an operating profit of around 3.8 trillion won, slightly lower than the 3.94 trillion won profit from the previous year. The launch of the Galaxy S24 smartphones with AI functions at the end of January has helped boost sales, with an estimated 57 million smartphones shipped during the first quarter, up 8% from the previous quarter.
The average selling price of Samsung smartphones also rose by 30% to $340 quarter-on-quarter, which supported profits, according to Eugene Investment & Securities. Samsung will announce its preliminary first-quarter earnings results on Friday, before reporting full figures later this month.