Samsung posts record $38B profit on AI chip demand

Samsung posts record $38B profit on AI chip demand

Samsung Electronics has reported a record-breaking first-quarter operating profit, beating analysts' expectations.

The South Korean tech giant's quarterly profit jumped over 750% year-on-year to a new high, driven by the explosive growth of its chip business.

The company also recorded record revenue, which was up nearly 70% from last year.

Revenue and operating profit exceed analysts' expectations

Samsung's first-quarter results showed a revenue of 133.9 trillion Korean won ($89.96 billion), beating the expected 132.69 trillion won.

The operating profit also exceeded expectations with a reported value of 57.2 trillion won ($38.43 billion) against an anticipated 55.28 trillion won.

These figures are in line with Samsung's own estimate for operating profit and surpass its full-year 2025 profits of 43.6 trillion won, extending the momentum from last year's fourth quarter.

Explosive growth driven by chip business

Samsung's record earnings were largely driven by its chip business. The company is a major producer of memory chips, in addition to its smartphone business and semiconductor foundry services.

The global AI data center boom has significantly boosted demand for these chips, tightening supply and increasing prices.

Samsung expects server memory demand to remain strong in the second half of the year as hyperscalers continue to accommodate AI adoption and demand for agentic AI accelerates.

Chip sales up 225% from last year

Samsung's chip business, also known as its DS (Device Solutions) division, includes memory chip, semiconductor design and foundry business units.

The division posted an operating profit of 53.7 trillion Korean won in Q1 2026, compared to just about 1 trillion Korean won in the same period last year.

These profits accounted for over 90% of the company's total earnings for the quarter.

Overall chip sales reached a staggering 81.7 trillion Korean won, up 225% from last year.

Memory supply still lags far behind customer demand

Samsung's memory business has outperformed its quarterly sales record by meeting high-value-added AI demand despite limited supply availability.

The company credits industry-wide memory price increases as a contributing factor to this success.

However, an executive revealed during an earnings call that available memory supply still lags far behind customer demand.

They said, "Our demand fulfillment rate is now at record low, and unlike previous years, customers who are concerned about supply shortages are actually bringing forward their demand for 2027."

Tough competition in HBM business from SK Hynix

Despite its growing profits, Samsung faces tough competition in the HBM business from SK Hynix.

The company announced in February that it had become the first in the world to mass-produce and ship HBM4 memory chips to unnamed customers.

However, as manufacturers prioritize production for higher-margin AI applications, supply constraints have pushed up prices for memory used in consumer electronics.