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The South Korean firm projects an operating profit of $4.5bn, notably exceeding the analyst consensus of $3.47bn as reported by LSEG SmartEstimate.
Samsung has estimated an operating profit of $4.5bn for Q1 2025. (Photo: Shutterstock)
Samsung Electronics has projected higher-than-expected operating profits in Q1 2025, driven by increased sales in its memory chip and smartphone divisions. The South Korean company estimates an operating profit of $4.5bn, significantly surpassing the analyst consensus of $3.47bn gathered by LSEG SmartEstimate. This financial outcome is attributed to customers stockpiling chips in anticipation of potential US tariffs on semiconductor imports.
The modest 0.2% year-over-year decline in Samsung’s operating profit contrasts with a stronger performance compared to the previous quarter’s result of $4.41bn. Analysts suggest this resilience reflects strategic purchasing by clients wary of forthcoming trade barriers that could disrupt supply chains.
Impact of potential US tariffs on semiconductor imports
US President Donald Trump’s recent discussion on implementing tariffs on semiconductor imports forms part of a broader strategy affecting several nations, including China. Although semiconductors remain temporarily exempt, the looming uncertainty has prompted companies to secure inventory preemptively.
Following the preliminary earnings disclosure, Samsung’s shares experienced a 2.6% rise during morning trading, outpacing the KOSPI index’s 1.6% increase. Detailed financial results are scheduled for release on 30 April, providing further insight into net profit and divisional performance.
Despite a general decline in memory chip prices, Samsung’s shipments have remained steady. Greg Roh, head of research at Hyundai Motor Securities, noted that demand from customers aiming to bolster inventory ahead of potential US tariffs bolstered Samsung’s memory chip shipments.
Looking forward to the second quarter, Samsung anticipates challenges related to delays in acquiring new clients for high-bandwidth memory (HBM) chips and stagnant operating profits. Kim Sun-woo, a senior analyst at Meritz Securities, stated that while the memory chip segment showed solid results, losses within the foundry business likely balanced out some of these gains.
Samsung’s foundry operations manufacture chips on a contract basis for notable companies such as Nvidia, Qualcomm, and Advanced Micro Devices (AMD). Earlier this year, Samsung warned of reduced AI chip sales resulting from US export restrictions to China. However, a recovery is anticipated later in the year, driven by increased demand from smartphone manufacturers and data centres.
Recent industry reports in Korean media suggest that Samsung is in negotiations with major global clients to raise DRAM and NAND flash prices by up to 5%. This move is motivated by heightened demand and tariff concerns, representing a shift from Samsung’s previously conservative pricing approach amidst oversupply conditions, reported Maeil Business News Korea.
In the broader technology sector, companies faced volatility following tariff announcements. Apple, Microsoft, and Tesla ended a recent trading session with declines. Apple specifically dropped nearly 4%. Conversely, Alphabet, Amazon, Meta, and Nvidia recorded gains. Among semiconductor stocks, there were challenges as investors remained concerned about potential adverse impacts on demand due to tariffs. AMD and Intel observed declines of 2.5% and 1.4%, respectively.
Read more: US discusses new limits on semiconductor equipment support in China
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