Samsung Electronics (005930.KS) and SK hynix (000660.KS) each posted operating profit margins in the 70 percent range in the first quarter, ranking first and second in profitability among major global companies. The figures comfortably surpassed those of Nvidia, which leads the artificial intelligence (AI) chip ecosystem, and TSMC, the world's largest foundry (contract chip manufacturer). Industry observers say K-semiconductor has established itself as the most efficient "money machine" in the world.
According to industry sources Thursday, the memory division operating profit margins of Samsung Electronics and SK hynix reached 73 percent (estimated) and 71.5 percent, respectively, in the first quarter.
Samsung Electronics' Device Solutions (DS) division posted total first-quarter operating profit of 53.7 trillion won. Of this, adding the loss in the non-memory segment such as foundry (about 1 trillion won) to the memory business revenue (74.8 trillion won) and working backward, standalone memory operating profit is estimated at about 54.7 trillion won. Dividing this by revenue yields an operating profit margin of 73 percent.
SK hynix also recorded its best results since its founding, with first-quarter revenue of 52.5763 trillion won and operating profit of 37.6103 trillion won. While its official operating profit margin stands at 71.5 percent, analysts say profitability far exceeds this figure once conservatively set-aside provisions are excluded. Unlike Samsung Electronics, which has not yet reflected incentive provisions in its first-quarter results, SK hynix is reported to have pre-reflected 10 percent of operating profit (about 4 trillion won) as a source for performance bonuses. Stripping out conservative accounting treatment, the actual operating profit margin approaches 80 percent.
The two companies' profitability comfortably exceeds that of major global big tech firms. Based on recent quarterly results, they far outstripped Nvidia (65 percent), the AI chip powerhouse, and TSMC (58 percent), the top foundry. They opened a gap of more than double over Apple (35.3 percent) and Google (31.6 percent), and also came in higher than U.S. memory rival Micron (69 percent). The two companies' results soared as prices of high-bandwidth memory (HBM) and general-purpose DRAM surged across the board amid expanding global investment in AI infrastructure.
With cash piling up, discussions on compensation and shareholder return policies are also active. Under its principle of distributing 10 percent of profit, SK hynix is expected to pay about 600 million won per employee in performance bonuses this year. In line with its policy of returning 50 percent of free cash flow (FCF) to shareholders, the company plans to formulate large-scale share buyback and cancellation measures within the year.
Samsung Electronics has also moved aggressively to appease shareholders. The company confirmed cash dividends of 2.4533 trillion won in the first quarter alone, and earlier completed the cancellation of 14.6 trillion won (as of the board resolution date) in surplus treasury shares to enhance shareholder value. Regarding employee compensation, large-scale performance bonus provisions are expected to be reflected in upcoming second-quarter results, depending on the outcome of ongoing labor-management negotiations.
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