Samsung Electronics Reports Tenfold Increase in Q1 Operating Profit

Samsung Electronics reported a tenfold increase in its Q1 2024 operating profit to KRW 6.61 trillion ($4.85 billion), driven by surging chip prices, growing demand for generative AI, and a strategic focus on high-value-added products. The company's consolidated revenue reached KRW 71.92 trillion, with the Memory Business returning to profitability and the Mobile eXperience (MX) Business contributing to the positive earnings trend.

The strong performance was attributed to robust sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors. Samsung's memory chip sales nearly doubled during the quarter, fueled by the AI boom, and it expects robust demand, particularly in the generative AI sector, to continue driving growth in the second half of 2024. The company's semiconductor business, which earned KRW 1.91 trillion ($1.38 billion) in operating profit, marked its first quarterly profit since Q4 2022 as the chip market continues to recover.

Why this matters: Samsung's strong financial results highlight the growing impact of generative AI on the semiconductor industry and the increasing demand for advanced memory chips. As a global leader in memory chip production, Samsung is well-positioned to capitalize on the AI-driven growth in the tech sector.

Samsung's investments in the first quarter totaled KRW 11.3 trillion, with a focus on addressing demand for advanced memory products and expanding its foundry capabilities. The company announced the commencement of mass production for its latest high bandwidth memory (HBM) chips, which are customized for generative AI chipsets. Samsung plans to increase its supply of HBM chips by more than three-fold in 2024 and step up offerings of high-end solid-state drive (SSD) products to meet AI server demand.

Despite potential macroeconomic and geopolitical challenges, Samsung remains optimistic about sustained growth. The company expects its second quarter to 'remain solid' on continued demand from AI and has outlined plans to develop the next generation of HBM chips to meet the increasing AI-driven chip demand. Samsung also plans to expand AI features beyond its flagship Galaxy S24 smartphone to other mobile devices, as it expects AI to drive growth in the smartphone market amid improvements in global consumer spending.

Samsung's strong Q1 performance, driven by the memory chip market recovery and the growing demand for AI-focused chips, positions the company for continued success in the evolving tech landscape. As Samsung leverages its technological advancements and strategic focus on high-value-added products, it remains well-prepared to benefit from the expanding generative AI market and the increasing importance of advanced memory solutions in the AI era.

Key Takeaways

• Samsung Q1 2024 operating profit surged 10-fold to $4.85B, driven by chip prices, AI demand.
• Memory chip sales nearly doubled, fueled by AI boom; semiconductor biz returned to profitability.
• Samsung to increase HBM chip supply 3x in 2024 and expand high-end SSD offerings for AI servers.
• Samsung expects continued growth in Q2 2024 from AI demand and plans to expand AI features in phones.
• Samsung's strong Q1 performance positions it to benefit from the expanding generative AI market.