Samsung's Net Profit Soars as AI Demand Fuels Record Chip Earnings — Update

By Kwanwoo Jun

Samsung Electronics posted a nearly sixfold surge in first-quarter net profit, driven by record earnings in its core semiconductor business amid explosive demand for advanced chips at the center of the artificial-intelligence boom.

The world's largest memory-chip maker is widely expected to continue benefiting from tight supply and strong prices of memory products as the global AI-infrastructure buildout progresses.

Jaejune Kim, executive vice president of Samsung's memory business, said on an earnings call that the company's memory-chip production capacity was already "fully sold out" for this year.

Kim said he expects revenue from Samsung's high-bandwidth memory products--a critical component of AI chips--to more than triple in 2026, with the recently launched HBM4 likely to account for more than half of total HBM revenue.

Net profit was a record 47.225 trillion won, equivalent to $31.72 billion, in the three months ended March, a 474% increase from the previous year, the South Korean technology company said Thursday. That soundly beat a FactSet-compiled consensus estimate of 40.591 trillion won.

Revenue also hit a record, jumping 69% to 133.873 trillion won. Operating profit increased more than eightfold to an all-time high of 57.233 trillion won. Both figures were largely in line with the company's preliminary estimates.

Samsung's chip-making division drove the stellar earnings growth, posting a record operating profit of 53.7 trillion won. That accounted for more than 90% of the company's total earnings for the quarter, outweighing the sluggish performance in other segments. Higher prices of DRAM and NAND--the two main types of memory chips widely used in electronic goods--pressured Samsung's smartphone and home-appliance businesses by making key inputs and finished products pricier.

Analysts largely see Samsung, along with other memory-chip makers, extending record earnings through 2026.

Meritz Securities analysts Kim Sun-woo and Woo Seo-hyun said earlier this month that Samsung's operating profit could rise to 73 trillion won in the second quarter, 90 trillion won in the third quarter and 104 trillion won in the fourth quarter.

Samsung is set to benefit from sustained AI inference memory demand, with prices of its DDR5 RDIMM--a high-capacity, high-speed module designed for AI servers--likely to accelerate in the second half, Citigroup's Peter Lee and Jayden Oh said in a recent note.

The company's stock has advanced nearly 90% this year, outperforming the benchmark Kospi's roughly 60% gain.

Samsung in February said it became the first in the world to mass-produce the most advanced HBM4 for AI applications. It plans to provide upgraded HBM4E samples later this year. It is also manufacturing Groq 3 language processing units--the latest AI inference chips--for Nvidia, with shipments due to start in the second half of 2026.

Yet Samsung's booming profits are now at the heart of a labor dispute in South Korea, with unionized workers demanding that the company allocate 15% of annual operating profit to employee bonuses or face a strike from May 21 through June 7.

Management has rejected the union demand, which exceeds the company's bonus cap, currently set a t 50% of annual salary. The union, which claims to have more than 70,000 members, is seeking to have the cap removed and is threatening to disrupt production if its demands aren't met.

"Even if a strike occurs, we will respond within the law through a dedicated response system to ensure production is not disrupted," Chief Financial Officer Sooncheol Park said on Thursday's conference call. Management is seeking an amicable settlement through dialogue with the union, he said.

In 2024, the Samsung union staged its first-ever walkout to press for higher wages and better working conditions, but the action didn't disrupt operations at the company's heavily automated chip-making facilities in South Korea.

Samsung management has said the company needs to use its resources prudently, as it also needs investment for future growth.

Last month, Samsung said it would invest more than $70 billion this year in facilities and research and development to strengthen its memory, foundry and advanced-packaging businesses and reinforce its AI-chip leadership.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

April 30, 2026 00:41 ET (04:41 GMT)