Samsung Flags Eightfold Jump in Q1 Profit as AI Chip Demand Drives up Prices

Reuters04-07 07:45

  • Samsung estimates 57.2 trillion won in Q1 operating profit vs 6.7 trillion won year earlier

  • Analysts estimate 40.6 trillion won in Q1 operating profit

  • Chipmakers struggle to keep up with demand from AI data centres

(Reuters) - Samsung Electronics on Tuesday projected a record-high first-quarter profit, up more than eightfold from a year earlier and well above expectations as booming demand for artificial intelligence infrastructure caused supply bottlenecks and drove chip prices higher.

The world's largest memory chipmaker estimated an operating profit of 57.2 trillion won ($37.92 billion) for the January to March period, compared with an LSEG SmartEstimate of 40.6 trillion won and a more than eight-fold jump from 6.69 trillion won a year earlier.

The preliminary results nearly triple Samsung's previous record quarterly operating profit of 20 trillion won, reached in the fourth quarter last year.

Samsung has emerged as one of the major beneficiaries of the AI data centre boom that has constrained supply for traditional chips used in smartphones, PCs and game consoles and led to a near-doubling in chip prices in the first quarter alone.

Research TrendForce expects contract DRAM memory chip prices to increase more than 50% in the current quarter as the shortage persists.

About a year ago, Samsung CEO apologised for its disappointing earnings and share price performance, after the tech giant lagged its rivals in supplying high bandwidth memory (HBM) chips critical to Nvidia's AI chipsets.

But Samsung has been narrowing the gap with South Korean rival SK Hynix with its latest HBM4 chips while benefiting from the rebound in traditional chip demand fueled by AI inference, which allows AI models like ChatGPT to generate responses in real time.

Last month, U.S. memory chip maker Micron Technology forecast third-quarter revenue above Wall Street expectations after posting record earnings in the ​second quarter on booming AI demand and tight supply.

Samsung said its revenue was expected to grow 68% to 133 trillion won in the January to March period.

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