Three months surpass the whole year: Samsung Electronics’ profit guidance beats expectations—its quarterly earnings exceed 260 billion

Ask AI · How AI computing is driving a surge in Samsung storage chip profits?

At market open on April 7 local time, Samsung Electronics (005930.KS) rose more than 3%. On the news front, Samsung Electronics released its preliminary Q1 results. In the first quarter, operating profit reached 57.2 trillion won (about RMB 261 billion), up 185% quarter-over-quarter and up 755% year-over-year. In the same quarter, sales totaled 133 trillion won (about RMB 606.4 billion), up 41.7% quarter-over-quarter and up 68% year-over-year.

Samsung Electronics’ quarterly sales beat the prior market expectations, and operating profit also exceeded analysts’ estimates of 40.6 trillion won. Not only did it set a new record for the company’s quarterly profitability history, but its single-quarter operating profit also surpassed the operating profit for all of last year. According to estimates by a Korean local securities firm, Samsung Electronics’ Device Solutions (DS) division is expected to generate operating profit of over 42 trillion won in the first quarter, which is the main source of contribution to operating profit.

Samsung Electronics will release its full financial report later this month, including net profit and detailed data for each business segment.

Market sentiment continues to look favorably on the storage-demand growth driven by AI computing. On April 6 in the U.S. stock market, multiple storage-related stocks also moved higher.

Previously, a relevant paper released by Google said that TurboQuant (a key-value cache compression scheme) could reduce by 6x the long-text key-value cache demand in the inference stage of large language models, sparking concerns in the market that storage demand might be weakened. However, several U.S. stocks have gradually recovered from the “Google shockwave.” On April 6, Micron Technology (MU.O) rose 3.15%, SanDisk (SNDK.O) rose 3.28%, Western Digital (WDC.O) rose 3.11%, and Seagate Technology (STX.O) rose 5.58%.

On April 7 at the open, multiple storage-related stocks in A-shares also turned positive. Jianghai Long (301308.SZ) rose more than 4%, Foresee Storage (688525.SH) rose more than 5%, and Shanchuan Chuangxing (300475.SZ) rose more than 3%.

In terms of pricing, although some memory-module prices in Shenzhen Huaqiangbei have been lowered in recent days, market research organizations expect that, based on the cycle of quarterly price changes, DRAM (dynamic random-access memory) contract prices in the first and second quarters will continue to rise this year.

TrendForce expects that first-quarter DRAM contract prices will increase 93% to 98%, and second-quarter prices will rise 58% to 63%. NAND flash prices will also rise 70% to 75% in the second quarter, on top of an 85% to 90% increase in the first quarter. The firm said that North American cloud service providers are becoming increasingly clear about AI inference application scenarios, driving up demand for AI servers and general-purpose servers. On the NAND flash side, with generative AI entering a large-scale application stage, growth in enterprise SSD orders has not shown signs of slowing.

Recently, there have also been rumors in the market that Samsung Electronics will raise second-quarter DRAM contract prices by 30%. A reporter from Yicai Financial interviewed Samsung Electronics to verify the size of the price increase, but had not received a response as of the time of reporting. However, industry insiders told the reporter that the industry is currently in a “rush-buying” phase, and there is no unified standard market price. The spot-market prices differ from the prices OEM (contract manufacturer) factories receive. OEM prices are lower than spot-market prices, but they are also rising.

Daol Investment & Securities analyst Gao Yingmin (Ko Yeongmin) recently said, when discussing strong demand in the storage-chip market, that the situation is “as good as it can possibly be.”

When discussing factors behind storage shortages and price increases, the general manager of controller chip maker Maxiot Technology, Gou Jiazhang, also told reporters that the tightness in North America’s capacity is not expected to ease until 2028. 2026 will not be the last year of shortage-driven price hikes, and a turnaround in storage shortages in the second half of the year is not possible.

(This article comes from Yicai Financial)