Samsung Electronics’ strategic concentrate on AI has delivered excessive income within the first quarter of 2025, because the South Korean tech large navigates semiconductor market challenges and rising world commerce uncertainties.
The corporate posted an all-time quarterly excessive income of KRW 79.14 trillion ($55.4 billion), marking a ten% improve year-over-year, in accordance with its monetary outcomes launched on Wednesday. Working revenue climbed to KRW 6.7 trillion ($4.68 billion), representing a modest 1.5% improve in comparison with the identical interval final 12 months.
The outcomes exceeded Samsung’s earlier forecast of KRW 79 trillion and analysts’ expectations.
Smartphone success counters chip challenges
The Cell Expertise (MX) Enterprise emerged as the most effective performer, contributing KRW 37 trillion in consolidated income and KRW 4.3 trillion in working revenue – its highest degree in 4 years. The success was pushed primarily by robust gross sales of the flagship Galaxy S25 sequence, which options AI talents through Galaxy AI.
“Enhanced price competency and worth declines for some elements additionally contributed to stable double-digit profitability,” the corporate’s earnings report stated.
In distinction, Samsung’s Machine Options (DS) Division, which incorporates its semiconductor operations, posted KRW 25.1 trillion in income and KRW 1.1 trillion in working revenue – a 42% decline from the earlier 12 months. The efficiency displays ongoing challenges within the semiconductor market, notably in high-bandwidth reminiscence (HBM) gross sales.
“Total earnings have been impacted by the erosion of common promoting worth (ASP), in addition to a lower in HBM gross sales because of export controls on AI chips and deferred demand in anticipation of upcoming enhanced HBM3E merchandise,” Samsung stated.
Commerce tensions cloud future outlook
Regardless of the file income, Samsung has expressed warning concerning the second quarter, dropping its ordinary enterprise outlook because of rising macroeconomic uncertainties stemming from world commerce tensions and slowing financial development.
“As a result of fast modifications in insurance policies and geopolitical tensions amongst main nations, it’s troublesome to precisely predict the enterprise affect of tariffs and established countermeasures,” a Samsung govt acknowledged throughout Wednesday’s earnings name.
Of specific concern are US President Donald Trump’s “reciprocal” tariffs, most of which have been suspended till July however threaten to affect dozens of nations together with Vietnam and South Korea, the place Samsung produces smartphones and shows.
Whereas Samsung famous that its flagship merchandise like semiconductors, smartphones, and tablets are presently exempt from these tariffs, the corporate revealed that Washington is conducting a product-specific tariff probe into these classes.
“There are numerous uncertainties forward of us […] we’re speaking with associated nations to minimise adverse results,” Samsung stated in the course of the name.
In response to its challenges, the corporate disclosed it’s contemplating relocating manufacturing of TVs and residential home equipment.
AI funding and future technique
Regardless of these headwinds, Samsung stays dedicated to its synthetic intelligence technique, allocating its highest-ever annual R&D expenditure for 2024. Within the first quarter of 2025, the corporate elevated R&D spending by 16% in comparison with the identical interval final 12 months, amounting to KRW 9 trillion.
For the rest of 2025, Samsung plans to broaden its AI smartphone lineup by the introduction of “Superior Intelligence” to the Galaxy A sequence and the launch of the Galaxy S25 Edge in Q2. Later within the 12 months, the corporate will strengthen its foldable lineup with enhanced AI consumer experiences.
Within the semiconductor area, Samsung goals to strengthen its place within the high-value-added market by its server-centric portfolio and the ramp-up of enhanced HBM3E 12H merchandise to fulfill preliminary demand. The corporate expects AI-related demand to stay excessive within the second half of 2025, coinciding with the launch of recent GPUs.
“Within the cellular and PC markets, on-device AI is predicted to proliferate, so the Reminiscence Enterprise will proactively reply to this shift within the enterprise setting with its industry-leading 10.7Gbps LPDDR5x merchandise,” Samsung acknowledged.
The corporate’s foundry enterprise stays targeted on its 2nm Gate-All-Round (GAA) course of improvement, which stays on schedule regardless of present challenges.
Market response and aggressive panorama
Samsung shares have been buying and selling down roughly 0.6% following the announcement, reflecting investor issues concerning the unsure outlook.
The outcomes spotlight Samsung’s complicated place within the AI market – succeeding in consumer-facing purposes whereas working to meet up with rivals in AI-specific semiconductor elements.
Native rival SK Hynix, which reported a 158% bounce in working revenue final week to KRW 7.4 trillion, has overtaken Samsung in general DRAM market income for the primary time, capturing 36% world market share in comparison with Samsung’s 34%, in accordance with Counterpoint Analysis.
SK Hynix’s success has been notably pronounced within the high-bandwidth reminiscence section, which is essential for AI server purposes.
“Samsung has assumed that the uncertainties are diminished, it expects its efficiency to enhance within the second half of the 12 months,” the corporate famous, hanging a cautiously optimistic tone regardless of the challenges forward.
Samsung’s file income masks a pivotal crossroads for the tech large: whereas its AI-enhanced smartphones flourish, its once-dominant semiconductor enterprise dangers falling behind within the AI revolution.
The approaching quarters will reveal whether or not Samsung’s huge R&D investments can reclaim misplaced floor in HBM chips, or if we’re witnessing a elementary energy shift in Asian tech manufacturing that might alter the worldwide AI provide chain for years to come back.
For a corporation that rebuilt itself quite a few instances over its 56-year historical past, the AI semiconductor race might show to be its most consequential transformation but.
(Picture credit score: Anthropic)
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