Samsung Electronics announced a significant increase in its first-quarter net profit, soaring more than fivefold compared to the previous year. The surge was attributed to the strong demand for high-end memory chips used in artificial intelligence applications. The company’s net profit for the three months ending in March rose to 47.22 trillion won (US$31.8 billion) from 8.22 trillion won a year earlier.
Operating profit also saw a substantial jump, increasing more than eightfold to 57.23 trillion won from 6.68 trillion won in the same period. Sales climbed by 69.2 percent to 133.87 trillion won from 79.14 trillion won. Samsung Electronics credited the record quarterly operating profit and sales to robust sales of high-margin AI chips and the rising memory prices in the device solutions division.
The company highlighted that the weaker won against the U.S. dollar contributed an additional 1.8 trillion won to the operating profit. Looking forward, Samsung Electronics anticipates a strong performance in the second quarter, supported by the continuous heavy investment in AI infrastructure by global technology firms, which is expected to bolster memory chip prices.
Major tech companies like Meta Platforms Inc. and Amazon.com Inc. have been increasing their investments in data centers and related hardware, driving the demand for AI chips. To meet the growing demand, Samsung Electronics revealed plans to enhance the supply of sixth-generation high bandwidth memory (HBM4) this year.
During its annual shareholders meeting, the company discussed the possibility of emphasizing securing multiyear contracts to stabilize supply and support pricing. This strategic move aims to provide a buffer against cyclical downturns. However, Samsung Electronics is currently facing the threat of a general strike by its 75,380 unionized workers. The workers are demanding that 15 percent of the annual operating profit be allocated for employee compensation each year.
The union has issued a warning of an 18-day general strike starting on May 21 unless the company presents an acceptable performance-based pay framework. Analysts have expressed concerns that a prolonged strike could disrupt chip production significantly. Nevertheless, some experts believe that any potential impact may be limited due to the high level of automation in memory manufacturing facilities.
