Samsung Electronics (005930.KS) posted an all-time record quarterly operating profit in the first quarter of this year. The result came from a combination of a memory semiconductor super-cycle and a favorable exchange rate. Securities analysts now forecast that Samsung could overtake Nvidia to become the world's top company by operating profit as early as next year.
Samsung said in a regulatory filing Monday that it recorded first-quarter revenue of 133 trillion won ($93.1 billion) and operating profit of 57.2 trillion won ($40 billion). The figure is close to the company's full-year record operating profit of 58.89 trillion won set in 2018. Analysts say Samsung is likely to surpass that annual record in the second quarter alone.
The operating profit margin reached 43%. Given that this is a company-wide figure encompassing foundry, mobile, and consumer electronics divisions — some of which are running at a loss — the actual profitability of the core memory division is estimated to be significantly higher.
The gap with global competitors is stark. TSMC of Taiwan is estimated to have posted quarterly operating profit of around 20 trillion won, while SK hynix (000660.KS) recorded approximately 30 trillion won. Saudi Aramco reported roughly 41 trillion won in the fourth quarter of last year. Nvidia posted operating profit of approximately 63 trillion won based on its February earnings report, but direct comparison has limitations as U.S. companies are typically evaluated on net income.
Securities firms have raised their full-year operating profit forecasts for Samsung from around 200 trillion won to over 300 trillion won. KB Securities projected 327 trillion won for this year and 488 trillion won for next year. With the gap from Nvidia's forecast of 357 trillion won for this year standing at only 30 trillion won, analysts are leaving open the possibility of Samsung overtaking Nvidia next year. "Samsung's market capitalization is only 19% of Nvidia's, making its valuation highly attractive," KB Securities said in a report.