Samsung Electronics reports record first-quarter operating profit of $38.4 billion – Copyright AFP SONNY TUMBELAKA
Jihye Shin and Matthew Walsh
Samsung Electronics said on Thursday that operating profit rose 750 percent year-on-year to a record high in the first quarter thanks to strong sales of core chips for artificial intelligence and forecast healthy demand to continue in the next three months.
The South Korean tech giant has emerged as a key player – along with rival SK hynix – in supplying high-performance chips in demand by companies racing to keep up with the fast-developing artificial intelligence industry.
Their strong performance has come as the South Korean government has vowed to make the country one of the world’s top three AI powers alongside the United States and China.
Samsung said in its earnings report Thursday that it had “achieved record quarterly revenue and operating profit through AI technology innovations and proactive market response.”
It said operating profit came in at 57.2 trillion won ($38.4 billion), saying earlier in the month it was expected to hit a quarterly record.
Net profit came in at 47.1 trillion won, beating forecasts in a Bloomberg survey of analysts, while sales came in at 133.9 trillion won, an all-time quarterly high.
Its chip division also beat expectations with a big increase in profit to ¥53.7 trillion, making up the bulk of the unit’s total.
The company said its memory arm “surpassed its record quarterly sales by addressing demand for high-value-added AI despite limited supply availability, with industry-wide memory price increases also a contributing factor.”
He added that he expected “strong memory demand to continue” during the second quarter as AI infrastructure construction continues apace.
South Korea’s Kospi stock index jumped to a new record of more than 6,700 points after the numbers, which came after strong gains from US tech giants Microsoft and Alphabet.
– Riding the AI Wave –
Samsung shares have risen nearly 300 percent over the past year as the AI boom fuels South Korea’s growth and pushes the stock market to new records.
The company has seen strong orders from big tech firms for high-bandwidth memory — a type of chip used in data centers and AI “accelerators” that are useful in performing demanding tasks and calculations.
It’s also driving up the cost of less flashy chips used in consumer electronics — threatening higher prices for phones, laptops and other devices around the world.
However, Samsung faces risks from a threatened strike next month as workers demand higher wages and bonuses.
Tens of thousands of unionized staff rallied last week outside the company’s plant in Pyeongtaek, south of Seoul, to demand a seven percent pay rise, an end to a cap on bonuses and other benefits.
A group of unions representing about 90,000 workers in total have said they will stage a strike from May 21 to June 7 unless an agreement is reached with management.
The company also faces a lawsuit in the United States alleging it infringed on patents related to foldable smartphone technology by manufacturing and selling Galaxy Z Fold, Z Flip and Z TriFold devices without permission, according to court documents.
SK hynix said last week reported net profit rose almost 400 percent to a record high in the first quarter, shrugging off concerns that war in the Middle East could hit the semiconductor industry.
