Seoul: Samsung Electronics Co. announced on Thursday that its net profit for the first quarter soared more than fivefold compared to the previous year, fueled by strong demand for high-end memory chips used in artificial intelligence (AI) applications. The company's net profit for the three months ended March rose to 47.22 trillion won (US$31.8 billion), a significant increase from 8.22 trillion won in the same period the previous year.
According to Yonhap News Agency, Samsung's operating profit increased over eightfold to 57.23 trillion won from 6.68 trillion won, while sales surged 69.2 percent to 133.87 trillion won from 79.14 trillion won. The company attributed the record quarterly operating profit and sales to robust sales of high-margin AI chips and escalating memory prices in its device solutions division. Additionally, a weaker won against the U.S. dollar contributed an extra 1.8 trillion won to the operating profit.
Looking forward, Samsung expects continued solid performance in the second quarter, driven by ongoing significant investment in AI infrastructure by global technology firms, which is anticipated to sustain memory chip prices. Companies such as Meta Platforms Inc. and Amazon.com Inc. have been increasing their expenditures on data centers and associated hardware, bolstering demand for AI chips.
In response to growing demand, Samsung Electronics plans to enhance the supply of sixth-generation high bandwidth memory (HBM4) this year. During its annual shareholders meeting last month, the company mentioned the possibility of emphasizing securing multiyear contracts to stabilize supply, which could support pricing and provide a safeguard against cyclical downturns.
Nevertheless, Samsung is confronted with the challenge of a potential general strike by its 75,380 unionized workers. The union is demanding that 15 percent of the annual operating profit be allocated for employee compensation each year, threatening to initiate an 18-day general strike starting May 21 unless an acceptable performance-based pay framework is presented by the company.
Analysts have differing opinions on the potential impact of a prolonged strike, with some warning of significant disruptions to chip production, while others predict a limited effect due to the high level of automation in memory manufacturing facilities. As of 10:30 a.m., Samsung Electronics shares had decreased by 0.22 percent to 225,000 won, underperforming the broader Korea Composite Stock Price Index (KOSPI), which fell 0.17 percent.