SEOUL: Samsung Electronics Co says its operating profit shot up more than 10-fold in the first quarter, with its chip business shifting to the black for the first time in five quarters.
Samsung Electronics, the world’s largest maker of smartphones and memory chips, said its operating profit reached 6.6 trillion won (US$4.8bil) for the January to March period, compared with 640.2 billion won a year ago.
Its sales jumped 12.8% to 71.9 trillion won, and net profit soared 329% to 6.75 trillion won, the company said in a regulatory filing.
The earnings beat market expectations. The average estimate of operating profit by analysts stood at 5.6 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Samsung Electronics said it has invested 7.82 trillion won in research and development for the quarter ending March, marking the largest quarterly investment.
Samsung Electronics said its chip business earned 23.1 trillion won in sales for the three-month period through March, with an operating profit of 1.91 trillion won.
This is the first time the company’s semiconductor segment has posted profit since the fourth quarter of 2022.
It logged an operating loss of over 15 trillion won last year amid a downturn in the global chip market.
Strong demand for memory chips lent support to the better-than-expected performance of the company’s chip business on rising DRAM and NAND flash prices, with steady sales of double data rate five products and massive solid state drives.
The company said it has pulled off the quarterly growth in the sector by a timely response to demand for high-value-added products, including high bandwidth memory, DDR5 and SSD servers, turning its memory business profitable.
In order to keep up with the booming demand for generative artificial intelligence, Samsung Electronics said it will start mass producing its latest 12-layer HBM3E products within the second quarter.
Mass production of the eight-layer HBM3E started in April, the company added.
Its foundry, or contract chip manufacturing, businesses saw its sales remain sluggish but operating losses narrow thanks to effective management.
“The development of advanced 3-nanometer and 2nm technologies is progressing smoothly, and 4nm technology yields have stabilised,” it said.
“This improvement in advanced technology competitiveness helped the foundry business achieve its highest-ever order backlog in the first quarter.”
The chipmaker said its foundry business is expected to post a double-digit on-quarter growth in the second quarter after bottoming out in the first quarter as customer inventory adjustments have been finalised and line utilisation improved.
Samsung Electronics plans to complete the development of 2nm design infrastructure and prepare infrastructure for various applications in mature processes, such as 14nm and 8nm, to secure customers.
Samsung’s mobile and other devices business posted 47.3 trillion won in sales and 4.1 trillion won in operating profit in the first quarter. — The Korea Herald/ANN