Samsung Electronics (005930) set an unprecedented record by surpassing its entire previous year's operating profit in just three months during the first quarter of this year. Riding the wave of global artificial intelligence (AI) infrastructure investment, the company knocked out Alphabet, Google's parent company, to enter the top 5 in global big tech operating profit rankings. This earnings surprise that easily exceeded market forecasts is largely attributed to the memory semiconductor supercycle.
'Ultra-Gap' Performance 40% Above Market Forecasts
Samsung Electronics announced on the 7th that its preliminary consolidated results for the first quarter recorded revenue of 133.2 trillion won and operating profit of 57.2 trillion won. This significantly exceeds the average forecast (40.2 trillion won) released by securities firms just a week ago by approximately 42.3%. Compared to the same period last year, revenue increased by 68.1% and operating profit surged by 755%.
The company-wide operating profit margin (43%), a profitability indicator, also doubled compared to the previous quarter. Notably, surpassing the entire operating profit Samsung Electronics earned throughout last year (43.6011 trillion won) in just the first quarter is evaluated as the best performance in company history and a record that will go down in Korean corporate history.
Memory 'Supercycle' Overshadows Non-Memory Losses
The core driver behind this explosive performance is undoubtedly the semiconductor (DS) division. The DS division's operating profit in the first quarter is estimated to have surged more than threefold compared to the previous quarter (16.4 trillion won), accounting for approximately 53 trillion won—the majority of total profits.
What's noteworthy is that within the DS division, performance varied dramatically depending on the business area. The non-memory business units, including foundry and System LSI that are ramping up advanced process utilization rates, are understood to have posted operating losses of approximately 1.5 trillion won due to delays in yield stabilization. However, DRAM and NAND flash generated massive profits of around 44 trillion won and 10 trillion won respectively, completely offsetting the non-memory division's underperformance.
NAND Prices Triple… Profitability Driven by AI Data Centers
The maximization of memory semiconductor profitability stemmed from the explosion in data center demand brought about by the transition to the "Agentic AI" era. As demand from downstream industries overwhelmed supply, product prices skyrocketed.
According to market research firm DRAMeXchange, DRAM fixed transaction prices rose 39.8% from $9.30 in December last year to $13.00 in March this year. The price surge for NAND flash was even steeper. NAND prices, which were $5.74 during the same period, soared 208.8% to $17.73, creating the remarkable scene of prices tripling in just one quarter.
Leaping to 4th Among Big Tech… Surpassing 'Nvidia' Next Year
Powered by the semiconductor super-boom, Samsung Electronics' global standing has also risen a notch. Comparing quarterly operating profits of global big tech companies that recently announced results using an exchange rate of 1,505 won per dollar, Apple ranks first with $50.9 billion, followed by Nvidia with $44.3 billion, and Microsoft with $38.3 billion. Samsung Electronics posted approximately $38 billion in operating profit, surpassing Alphabet's $35.9 billion to firmly secure a position in the global top 4.
Experts forecast that the semiconductor boom cycle will continue for the time being. Kim Dong-won, Head of Research at KB Securities, analyzed that "Big tech companies are driving memory demand structurally as they execute AI infrastructure investments exceeding 1,000 trillion won annually." Starting in the second half of the year, volumes of the higher-priced 6th generation High Bandwidth Memory (HBM4) are expected to be fully reflected in results.
According to FnGuide, the highest forecast for Samsung Electronics' annual operating profit this year has been revised upward to around 321.7 trillion won. If this momentum continues, annual operating profit in 2027 could reach 488 trillion won, leading to observations that the company has a strong possibility of overtaking Nvidia (forecast of approximately 485 trillion won), which currently leads the AI market, to become the undisputed world's number one company in operating profit.
