Samsung sees profits increase 10-fold as chips business rebounds

The South Korean company is expecting profit between January and March to be 931% higher than the same period last year. 

Electronics giant Samsung has estimated its operating profit for the first three months of the year would rise 10-fold as chip prices start to rebound from a severe downturn due to a boom in artificial intelligence.

While this topped marked expectations, the company’s guidance was not enough to cheer investors, who sent Samsung shares down 1.3% early on Friday, as they await updates on progress in its high-end memory chip business that has been lagging behind rivals.

The world's largest memory chip and TV maker estimated its operating profit rose to a better-than-expected 6.6tn Korean won (€4.51bn) between the start of January and the end of March.

That was up 931% from the same period in 2023 and would mark Samsung's highest operating profit since the third quarter of 2022. But revenue missed expectations, likely rising 11% from the same period a year earlier to 71tn won (€48.5bn).

The company is due to release detailed earnings on April 30.

The better performance came as its chip division, traditionally its biggest earner, is expected to report its first quarterly profit in five quarters as memory chip prices bounce back from a deep trough that began in mid-2022 due to weak post-pandemic demand for gadgets.

DRAM chip prices rose about 20% during the first quarter versus the previous quarter, while NAND flash chip prices increased by 23% to 28%, according to data provider TrendForce.

South Korea’s exports of these chips increased by nearly 36% last month compared to the same period last year.

At a shareholders meeting on March 20, Samsung’s chief executive in charge of its semiconductor business Kyung Kye-hyun said its operations should recover to 2022 levels this year as the longstanding market slump begins to end.

In its mobile business, Samsung likely reported a solid profit after launching sales of its new flagship Galaxy S24 smartphones in late January, analysts said.

• Reuters