Samsung's first-quarter profit likely to soar nine-fold

Samsung's profit spike: Samsung Electronics is projected to unveil a substantial surge in first-quarter profits, marking a nine-fold increase from the same period last year. This surge is attributed to the recovery in semiconductor prices, which has boosted earnings after a prolonged period of chip downturn.

Analysts anticipate that Samsung's operating profit for the quarter ending March 31 will reach approximately 5.7 trillion won ($4.24 billion). This estimate, derived from 27 analysts' forecasts, underscores a resurgence not witnessed since the third quarter of 2022. In comparison, the company recorded a mere 640 billion won in operating profit during the first quarter of the previous year.

Profitable chip segment

The resurgence is chiefly driven by the performance of Samsung's chip division, its primary revenue generator. Forecasts suggest that the chip segment is poised to report its first quarterly profit in five quarters, estimated at around 750 billion won by a consensus of 12 analysts.

The revival in memory chip prices, particularly for DRAM and NAND Flash chips, has been instrumental in boosting Samsung's financial performance. Prices surged by approximately 20 per cent and 23-28 per cent respectively in the first quarter, buoyed by increased demand for tech devices and data storage solutions.

Despite continued losses in its chip design and manufacturing businesses, Samsung has benefited from constrained chip supply and restocking activities by buyers, which have improved profit margins.

Smartphone profit dip

In the mobile division, Samsung is expected to report an operating profit of approximately 3.8 trillion won, slightly lower than the previous year's figure. The release of the latest flagship Galaxy S24 smartphones, equipped with advanced AI features to rival competitors like Apple, has driven a modest increase in smartphone shipments.

Analysts estimate that Samsung shipped around 57 million smartphones during the first quarter, representing an 8 per cent increase from the previous quarter. Additionally, a 30 per cent rise in the average selling price of Samsung smartphones is anticipated, further contributing to profit growth.

Samsung is scheduled to announce its preliminary first-quarter earnings results on Friday, with detailed figures to follow later this month.

(With Reuters Inputs)