Samsung Electronics’ working revenue jumps 932.8% in first quarter, beats expectations

Samsung Electronics on Tuesday mentioned working revenue for the primary quarter jumped 932.8% as reminiscence chip costs rebounded on the again of AI optimism.

Listed here are Samsung’s first-quarter outcomes versus LSEG estimates:

• Income: 71.92 trillion Korean received (about $52.3 billion), vs. 71.04 trillion Korean received
• Working revenue: 6.61 trillion Korean received, vs. 5.94 trillion Korean received

Samsung’s income for the quarter ending March jumped 12.81% from a yr in the past, whereas working revenue soared 932.8% in the identical interval.

The figures had been in step with the corporate’s steering earlier this month, the place Samsung said operating profit within the January-March quarter probably rose to six.6 trillion Korean received, up 931% from a yr in the past. The agency anticipated first quarter income at 71 trillion received.

The South Korean electronics large noticed record losses in 2023 because the trade reeled from a post-Covid droop in demand.

“The company posted KRW 71.92 trillion in consolidated revenue on the back of strong sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors. Operating profit increased to KRW 6.61 trillion as the Memory Business returned to profit by addressing demand for high value-added products,” Samsung Electronics mentioned in an announcement on Tuesday.

Samsung is the world’s largest producer of dynamic random-access reminiscence chips (DRAM), that are generally present in a variety of shopper units together with smartphones and computer systems.

“We assume the earnings surprise was driven by higher memory price hike on AI-driven strong upturn cycle. We anticipate the company will guide for positive memory market outlook and emphasize its readiness in AI era including HBM (12H HBM3E, HBM4) and foundry/packaging solution,” mentioned SK Kim of Daiwa Capital Markets in emailed feedback to CNBC on Monday, forward of the earnings launch.

As AI fashions change into extra advanced and datasets change into bigger, these fashions want reminiscence chips with greater capacities and quicker speeds to cater to those workloads.

Kim mentioned in an April 5 report he expects one other worth hike on reminiscence chips to drive Samsung’s second-quarter earnings on the again of an AI growth and the earthquake in Taiwan.

“Especially, we expect more upside in prices resulting from the earthquake in Taiwan,” mentioned Kim, including that the earthquake in early April briefly impacted TSMC‘s and Micron‘s manufacturing.

Citi analysts mentioned they see upside for Samsung’s NAND flash reminiscence enterprise on account of AI computing demand. In a observe on April 5, they reiterated their “buy” score on the agency with a goal worth of 120,000 received — a 56% upside from the closing worth of 76,700 received on Monday.

NAND is one other staple reminiscence chip alongside DRAM.

“We expect storage (HDD) to be the next bottleneck in AI computing, especially in AI training, and foresee Samsung Electronics to be one of the key beneficiaries of SSD demand momentum for AI training,” mentioned the Citi analysts.

Earlier this month, the Biden administration agreed to grant Samsung as much as $6.4 billion of funding to create new manufacturing capability to provide chips in Texas. Micron and TSMC are additionally poised to obtain grants to spice up chipmaking within the U.S. after a long time of chip manufacturing transferring to Asia.

Samsung and TSMC are set to face competitors from Japan’s Rapidus Company, which was lately granted $3.89 billion in additional subsidies from the Japanese authorities to mass produce 2-nanometer chips from 2027.

There are rising issues that Samsung Electronics dangers dropping its main place to rivals like SK Hynix, the world’s no. 2 reminiscence chip maker.

SK Hynix on March 19 said it became the first within the trade to mass produce HBM3E, the next-generation of excessive bandwidth reminiscence chips utilized in AI chipsets. SK Hynix is the first provider of HBM3 chips to Nvidia’s AI chipsets.

Mehdi Hosseini, senior tech {hardware} analyst of Susquehanna Worldwide Group, identified in early April that Samsung was the market chief in reminiscence, smartphones and show improvements.

Now, Samsung is simply “benefiting from the cycle recovery,” he added.

Within the first quarter, Samsung managed to regain the highest spot in smartphone shipments after dropping the crown to Apple in 2023, according to International Data Corp.