Samsung revenue jumps 13% to $52.14 bn in first-quarter

Samsung Electronics said in its earnings report that its first-quarter revenue rose 13 percent to 71.9 trillion won ($52.14 billion).
Samsung Display businessThe South Korean company’s operating profit rose to 6.6 trillion won in January-March, up from 640 billion won a year earlier. It was the company’s highest operating profit since the third quarter of 2022.

Samsung said the sale of Galaxy S24 smartphones and higher prices for memory semiconductors have contributed to the growth in revenue.

Samsung’s smartphones and networks businesses posted KRW 33.53 trillion in revenue and KRW 3.51 trillion in operating profit for the first quarter, down from 3.94 trillion won a year earlier.

Research firm Canalys says Samsung has regained the lead position in the global smartphone market, shipping 60 million units, buoyed by updates to its A-series and early premium offerings.

Canalys Senior Analyst Sanyam Chaurasia said: “Compared to last year’s S23 release, Samsung launched the Galaxy S24 a month earlier and shipped 13.5 million units, a 35 percent year-over-year shipment growth vs its predecessor in Q1.”

Samsung’s DS Division posted KRW 23.14 trillion in revenue and KRW 1.91 trillion in operating profit for the first quarter. There was a 96 percent increase in memory chip revenue to 17.49 trillion won as prices rose steeply from a severe downturn, partly thanks to the boom in AI.

Samsung’s SDC posted KRW 5.39 trillion in revenue and KRW 0.34 trillion in operating profit for the first quarter.

Samsung forecast demand for artificial intelligence would hold strong and tighten supply of some high-end chips, joining rivals in benefiting from a solid rebound in the battered global memory chip market.

“We plan to increase supply of HBM-related chips in 2024 by more than three-fold versus last year,” Jaejune Kim, a Samsung vice president in charge of the memory division, said on an earnings call.

Samsung said it began mass production this month of the latest HBM chips for use in generative AI chipsets, called 8-layer HBM3E. It is seeking to capitalise on the AI boom that has benefited SK Hynix, which had been the sole supplier of HBM3 chips to Nvidia.

Samsung said it planned to start making the 12-layer version during the second quarter, and expected the latest HBM3E products to account for two-thirds of its HBM output by year-end.

Samsung’s 8-layer HBM3E appears to be supplying Nvidia, while the 12-layer may go to AMD and Nvidia, said Jeff Kim, head of research at KB Securities.

“As Samsung’s technology is advantageous for high-stacking, while SK Hynix has its advantages in the 8-layer, there may be a segmentation where Nvidia gets 12-layer products from Samsung and most 8-layer products from SK Hynix,” Kim said. “Samsung is working hard to improve the yield of its 12-layer product.”

Samsung said it will step up offerings of solid-state drive (SSD) products to meet AI server demand, and expected high-end memory chip supply to become tighter toward year-end due to capacity being focused on HBM, echoing comments from SK Hynix last week.

The chip division, historically Samsung’s cash cow business that used to account for two-thirds of its operating profit, swung to a profit of 1.91 trillion won in the March quarter from a 4.58 trillion won loss a year earlier. It was the first profit since the third quarter of 2022.

Prices of NAND flash chips used to store data increased by 23 percent to 28 percent during the first quarter versus the previous quarter, while prices of DRAM chips used in tech devices rose by about 20 percent, according to data provider TrendForce.

Rising costs, including increased memory chip prices, dented margins from its flagship Galaxy S24 smartphones launched during the quarter.

Samsung said AI functions were driving sales of S24 phones, allowing the division to maintain double-digit profitability in the first quarter. About 50 percent of customers said they bought S24 phones for the AI functions, and 60 percent were regularly using the AI functions, the company said.

Samsung’s Visual Display and Digital Appliances businesses posted KRW 13.48 trillion in revenue and KRW 0.53 trillion in operating profit in the first quarter.

Samsung’s capital expenditures in the first quarter stood at KRW 11.3 trillion, including KRW 9.7 trillion for the Device Solutions (DS) Division and KRW 1.1 trillion on Samsung Display Corporation (SDC).

Baburajan Kizhakedath