Samsung Electronics Sees Modest First Quarter Profit Rise Ahead of US Tariffs

Samsung Electronics started the year with a slight increase in operating profit, largely attributed to a surge in smartphone purchases prior to potential U.S. tariffs. The mobile and network division of the South Korean technology leader stood out, achieving its best profit performance in four years, despite challenges faced in the AI chip department.

In the earnings report released on Wednesday, Samsung detailed an operating profit of 6.7 trillion won (approximately $4.68 billion) for the quarter ending in March, representing a 1.2% increase from the previous year. These results matched the company’s prior forecast of 6.6 trillion won.

Mobile Division Drives Success

The highlight of the report was Samsung’s mobile division, which reported an operating profit of 4.3 trillion won. This figure marked a 23% year-on-year increase, driven by strong sales of the latest Galaxy S series smartphones featuring advanced artificial intelligence capabilities. This achievement signifies the division’s most successful quarterly outcome since 2020.

Industry experts revealed that the surge in the mobile sector was propelled by heightened demand as both consumers and distributors expedited orders in light of anticipated U.S. tariff measures. With growing concerns regarding trade restrictions on products sourced from countries like China, Vietnam, and South Korea, Samsung stepped up smartphone production in Vietnam, India, and South Korea to mitigate possible disruptions.

Challenges in Semiconductor Division

However, not all areas of Samsung’s business shared in this success. The semiconductor division reported a profit of only 1.1 trillion won, reflecting a 42% decline compared to the prior year. Sales of AI chips, particularly High Bandwidth Memory (HBM) products, faced significant setbacks due to U.S. export restrictions on advanced chips to China, Samsung’s primary market. Additionally, the company fell behind competitors like SK Hynix in supplying HBM chips to prominent U.S. clients such as Nvidia.

Future Outlook for Samsung

Looking forward, Samsung intends to enhance production of its next-generation 12-layer HBM3E chips in the current quarter to regain market share in the AI server arena. The company acknowledged broader economic uncertainties and global trade tensions, especially the threat of U.S. tariffs, as critical challenges in the quarters to come.

Samsung’s overall revenue for the quarter was reported at 79.1 trillion won, a 10% increase year-on-year, which also aligned with earlier projections.