Samsung beats Q1 earnings expectations, but jury's out on next 3 months

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Samsung beats Q1 earnings expectations, but jury's out on next 3 months

Published: 08 Apr. 2025, 16:58 Updated: 08 Apr. 2025, 18:01

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

Samsung Electronics' Seocho office building in southern Seoul on April 8. [YONHAP]

Robust sales of the Galaxy S25 lineup are projected to have led Samsung Electronics to attain better-than-expected earnings in the first quarter, analysts said, although the mobile phone momentum could ease in the second quarter.

In a preliminary earnings report released Tuesday, the Korean electronics maker expects to post an operating profit of 6.6 trillion won ($4.48 billion), exceeding the market consensus of 4.96 trillion won compiled by market tracker FnGuide.

Its estimated quarterly sales figure is 79 trillion won, up 9.84 percent on year, and above the market expectation of 77.12 trillion won.

Its higher-than-expected earnings derived from strong sales of its new Galaxy S25 models and stronger-than-expected DRAM shipments.

The preliminary forecast does not include detailed breakdowns, but analysts forecast that its smartphone business generated around 4 trillion won in operating profit in the January-March period.

Galaxy S25 shipments are estimated to have reached nearly 13.5 million units until March, according to Meritz Securities analyst Kim Sun-woo.

“Sales of premium Android devices tend to be concentrated in the initial launch period,” Kim observed, adding that effective marketing highlighting the phone’s AI features and concerns over U.S. tariffs also contributed to the strong performance.

“However, S25 shipments are expected to fall below 8 million units in the second quarter. The upcoming release of the slimmer Galaxy S25 Edge will therefore be critical in sustaining the overall earnings momentum.”

Kim forecast the smartphone business to post 4.4 trillion won in operating profit, while the company's semiconductor segment will log 800 billion won. The display and consumer electronics sectors are expected to log 500 billion won respectively.

The prospect of a turnaround in the company's semiconductor business is far from unanimous, however, as the United States imposed new export bans on high bandwidth memory (HBM) chips to China for chipmakers that utilize U.S. technology and equipment in the manufacturing process, including Samsung, and the tariff pressure on chip products loom, with U.S. President Donald Trump saying such levies will be implemented “very soon.”

SK Securities analyst Han Dong-hee anticipates the company’s operating profit for the April-June period will be higher than this quarter on the back of continued strong shipments of commodity DRAM products.

“The company is likely to remain resilient thanks to a recovery in memory shipments, rising fixed prices for DDR5 and early price increases for certain NAND products,” Han said. “Contrary to market misconception, legacy products such as DDR4 and LPDDR4 remain profitable.”

The company is betting heavily on its latest HBM3E chips to boost its sales this year, although approval from its biggest customer, Nvidia, has yet to be finalized. Reports outlets such as TrendForce said that the Korean company is set to receive the green light from Nvidia for its 12-layer products between late May and early June.

“Even if Samsung secures quality certification for HBM3E, whether it could lead to meaningful earnings improvement remains uncertain as its competitors have already secured ground to become key suppliers [to Nvidia],” said Noh Geun-chang, head of Hyundai Motor Securities' research center.

BY LEE JAE-LIM [[email protected]]