Samsung Electronics posts record $38.5 bil. Q1 operating profit on AI chip boom

People walk past the gate of Samsung Electronics' headquarters in Suwon, Gyeonggi Province, Thursday. Yonhap

Samsung Electronics reported 57.23 trillion won ($38.55 billion) in operating profit and 133.87 trillion won in sales for the first quarter of the year, driven by strong demand for memory chips amid the global expansion of artificial intelligence (AI) infrastructure.

The company said Thursday in a regulatory filing that both figures marked sharp year-on-year increases of 69.16 percent and 756.1 percent, respectively, setting new quarterly records.

Among its business divisions, Device Solutions alone reported 81.7 trillion won in sales and 53.7 trillion won in operating profit.

The company attributed the robust numbers to its memory business, which is enjoying a supercycle due to strong demand for high-value-added AI products. In the first quarter, the company became the industry’s first to mass-produce and ship high-bandwidth memory 4 (HBM4) and next-generation low-power memory module Small Outline Compression Attached Memory Module 2 (SOCAMM2), adding to solid gains from rising prices for legacy DRAM products.

During an earnings call, the company said the average selling prices of DRAM and NAND rose by the low-90 percent range and the high-80 percent range, respectively, in the first quarter, lifting memory business revenue to 74.8 trillion won.

The chip design business also saw improved sales on the back of stronger demand for flagship system-on-chip products. The foundry business posted weaker sales due to seasonal factors, but the company said performance is expected to improve as the supply of products such as HBM4 base dies increases.

For the second quarter, the company said it will respond more proactively to strong memory demand. It plans to supply its first HBM4E samples achieving 16 gigabits per second of speed to actively meet initial memory demand for new graphics processing units and CPUs scheduled for release in the second half of the year.

A semiconductor fabrication line at Samsung Electronics' plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics

During the earnings call, the company said its HBM4 production capacity has already been sold out, adding that supply is set to expand in the second half of the year.

“HBM4 revenue will account for more than half of our total HBM sales starting in the third quarter and is expected to make up the majority on a full-year basis as well,” the company said.

Samsung also said it has signed multi-year long-term memory supply agreements with a number of clients, stressing that “such contracts carry stronger binding commitments than in the past” and “are structured to secure both business stability and visibility.”

In the foundry business, the company said it plans to begin mass production of second-generation 2-nanometer mobile chips in the second half of the year and ramp up mass production of 4-nanometer products and language processing units for AI applications.

Models promote Samsung Electronics' Micro RGB tv at 2026 World IT Show at COEX exhibition hall in Gangnam District, Seoul, April 22. Courtesy of Samsung Electronics

The Device Experience Division, which includes smartphones, home appliances and other devices, posted 52.7 trillion won in sales and 3 trillion won in operating profit.

A point of concern was that 2.8 trillion won of its operating profit came from its smartphone business, which released the Galaxy S26 series in March. Its home appliance and TV businesses ended up posting 200 billion won in operating profit in the first quarter, an improvement over an operating loss of 600 billion won in the fourth quarter of last year.

Samsung Electronics said the mobile division is expected to see a decline in sales in the second quarter as the initial boost from new model launches fades, but aims to offset the downturn with the release of new Galaxy A models.

For TVs, the company said it will seek to capture demand tied to scheduled global sporting events to drive sales.

Samsung Electronics has seen the profitability of its home appliance business significantly impaired, with rumors that the company may shut down production lines including those in Malaysia and withdraw from low-margin markets such as China.

The company did not confirm those rumors but said it is "pursuing a strategy of focusing on core businesses to improve business structure" and "reviewing various measures to diversify its profit base."

Members of Samsung Electronics' labor unions stage a rally at the company's plant in Pyeongtaek, Gyeonggi Province, April 23. Korea Times photo by Shim Hyun-chul

During the earnings call, questions were raised about the potential impact of a strike by its labor unions. The unions have threatened to stage a strike from May 21 to June 7, demanding that the company remove the cap on performance-based bonuses and allocate 15 percent of its operating profit to fund incentives.

The company said it has limited visibility on the potential impact, but added: “Even if a strike goes ahead, we plan to activate dedicated teams and response systems to minimize any production disruptions within the bounds of the law.”

The unions criticized the statement as misleading, saying that it contradicts Samsung Electronics’ argument in a court hearing on Wednesday.

In its request for an injunction with the Suwon District Court to ban the strike, the company argued that “even a lawful walkout could cause massive damage.”

The unions said in a statement that “either the company’s claim during the earnings call is false or it misled the court.” The court plans to deliver its ruling between May 13 and 20.

Meanwhile, the company said its R&D spending reached 11.3 trillion won in the first quarter.

Its subsidiary Harman posted 3.8 trillion won in sales and 0.2 trillion won in operating profit, while Samsung Display posted 6.7 trillion won in revenue and 0.4 trillion won in operating profit.