Samsung Forecasts Surge in Profit as AI Chip Demand Drives Prices Higher

Samsung Electronics has projected a sharp rise in first-quarter earnings, driven by soaring demand for artificial intelligence infrastructure that has tightened chip supply and pushed prices significantly higher.

The world’s largest memory chipmaker said its operating profit for the January–March period is expected to reach 57.2 trillion won (approximately $37.9 billion), far exceeding market expectations. The figure represents more than an eightfold increase compared to the same period last year and surpasses its total profit for all of 2024.

AI Boom Fuels Chip Demand

Samsung has emerged as a major beneficiary of the global AI boom, particularly the rapid expansion of data centres powering artificial intelligence systems. This surge in demand has strained the supply of memory chips, including DRAM, which are essential for AI workloads as well as traditional devices such as smartphones, PCs, and gaming consoles.

As a result, chip prices have risen sharply, nearly doubling in the first quarter alone. Industry analysts expect this trend to continue, with research firm TrendForce forecasting that DRAM contract prices could climb by more than 50% in the current quarter.

According to market analysts, customers anticipating further price increases have accelerated purchases, contributing to stronger-than-expected results for Samsung.

Record-Breaking Performance

The projected earnings mark a new milestone for Samsung, significantly exceeding its previous record quarterly operating profit of 20 trillion won, achieved in late 2024.

A substantial portion of this growth is attributed to the company’s memory chip division, which analysts estimate generated around 54 trillion won in operating profit. However, Samsung’s logic chip segment is expected to remain under pressure, posting a loss of approximately 1.6 trillion won.

Currency Boost and Market Reaction

Samsung has also benefited from macroeconomic factors, including the weakening of the South Korean won to near a 17-year low against the U.S. dollar. This has increased the value of overseas earnings when converted back into local currency.

Investor sentiment reflected the strong outlook, with Samsung shares rising 1.8% in trading, outperforming the broader market. Shares of rival SK Hynix also gained, climbing 3.4%.

Mobile Division Holds Steady

Samsung’s mobile business, where it competes closely with Apple, delivered a better-than-expected performance. The division recorded an estimated profit of 4 trillion won, slightly lower than the previous year but supported by the use of lower-cost component inventories.

However, analysts warn that margins in the mobile segment may face pressure in the coming months. Rising costs of memory chips and other materials, along with broader geopolitical factors such as tensions in the Middle East, could weigh on profitability in the second quarter.

Outlook: Strong Demand, Growing Pressures

Samsung’s strong earnings outlook underscores the transformative impact of artificial intelligence on the semiconductor industry. As AI adoption accelerates, demand for high-performance memory chips is expected to remain robust.

At the same time, supply constraints and rising input costs present ongoing challenges, particularly for divisions outside the core memory business.

For now, Samsung appears well-positioned to capitalise on the AI-driven surge in demand, reinforcing its leadership in the global semiconductor market.