Samsung Electronics Net Profit Increases Nearly Fivefold in Q1, Second Quarter Focuses on Strike Risks

The company achieved sales of 133.87 trillion won in the first quarter, operating profit of 57.23 trillion won, and net profit of 47.10 trillion won, far exceeding the market's previous estimate of 38.29 trillion won in net profit.

In the storage and chip business, Samsung Electronics warned that the chip supply shortage situation will continue in the second half of the year, and the supply-demand gap in the memory market may further widen by 2027. The company expects strong server storage demand in the second half of the year, and points out that the development of AI technology will accelerate demand growth in the second half of the year.

In the high bandwidth storage area, Samsung revealed that the production capacity of HBM has been sold out, and the annual revenue is expected to triple compared to the same period last year. The company plans to deliver HBM4E samples in the second quarter, and from the third quarter, HBM4 will account for more than half of the total HBM revenue, marking an accelerated shift in product structure to higher generations.

Regarding the foundry business, Samsung revealed that the development of the 1.4-nanometer process is progressing smoothly, with the goal of expanding the large customer base for the 2-nanometer process in the second quarter, and will expand the production capacity of the second-generation 2-nanometer process for mobile products.

The company expects the mobile business sales to decline quarter-on-quarter in the second quarter. In terms of geopolitics, conflicts in the Middle East have not had a substantial impact on the supply chain, with ample process gas inventory and diversified suppliers, there is no long-term supply risk. However, the rise in international oil prices is pushing up transportation costs, bringing some pressure to operations.

It is worth noting that a major strike by the union is expected to be held from May 21 to June 7, Samsung said it will make every effort to avoid production disruption. In addition, the bonus negotiations with the union are still ongoing, and whether the relevant provisions will be booked in the second quarter depends on the outcome of the negotiations.