Samsung estimates profits increased 10 times thanks to the chip segment

Recovery in memory chip prices helps Samsung Electronics expect a profit of nearly 4.9 billion USD in the first 3 months of the year.

On April 5, Korean electronics giant Samsung Electronics forecast first-quarter profit to reach 6,600 billion won (4.89 billion USD). This number increased more than 10 times compared to 640 billion won in the same period last year. The reason is thanks to the recovery in chip prices, pulling the company's profits up.

Last year, chip demand plummeted globally, causing inventories to increase. In the first quarter of 2023, Samsung Electronics' memory chip segment lost up to 4,580 billion won (3.4 billion USD).

This segment was once considered the "golden egg" for Samsung. In 2021, they surpassed Intel to become the semiconductor chip manufacturer with the highest revenue globally. Samsung is currently the world's largest manufacturer of memory chips and TVs.

Today's estimated figure also exceeds financial services firm LSEG SmartEstimate's forecast of 5,700 billion won. However, the estimated revenue given by Samsung is 71,000 billion won, up 11% over the same period last year, but lower than LSEG's forecast.

Memory chip model manufactured by Samsung mounted on a circuit board. Photo: Samsung

Samsung Electronics usually does not release much information in preliminary estimates. Investors are currently waiting for the official business results report, which will be announced this month.

They want to see if the semiconductor business returns to profitability. Samsung's device solutions segment (including memory chips) has lost money for 4 consecutive quarters, by the end of 2023. However, this segment is gradually recovering.

Analysts say Samsung Electronics is behind rivals such as SK Hynis and Micron Technology in the race for high-bandwidth memory (HBM) - a core component in the AI ​​chip fever. Therefore, if the company makes moves to catch up with competitors in this segment, investors will pay more attention to them.

Samsung Electronics shares rose 5% in the first quarter of the year. On April 4, this code closed the session with an increase of 1.4%.