Samsung sees robust AI demand after Q1 chip profit jumps almost 50fold
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The world’s top memory chipmaker by sales has signed multi-year binding contracts with customers hoping to lock in supplies.
PHOTO: REUTERS
SEOUL – Samsung Electronics on April 30 reported record quarterly profit driven by an almost 50fold jump in chip income, saying it expects the momentum to continue as clients spend on AI infrastructure and drive up prices of its memory chips.
The world’s top memory chipmaker by sales added that it has signed multi-year binding contracts with customers hoping to lock in supplies, without disclosing identities or terms.
A boom in the construction of AI data centres has spurred Samsung and chipmaking peers to allocate production capacity to advanced chips that Nvidia uses in its so-called AI accelerators, squeezing the supply of more conventional chips.
Samsung said it “expects server memory demand to remain strong as hyperscalers accommodate enterprises’ increasing adoption of AI” and large language model services.
It expects agentic AI – AI that operates autonomously – “to accelerate growth in demand” in the second half of 2026.
A day earlier, US tech giants including Alphabet, Amazon and Microsoft signalled sustained AI spending.
Revealing the extent of the AI boom, Samsung said January-March operating profit in its cash cow chip division reached a record 53.7 trillion won (S$46.3 billion) from just 1.1 trillion won in the same period a year earlier.
That accounted for 94 per cent of the quarter’s 57.2 trillion won record total. That figure matched Samsung’s estimate announced earlier in April and compared with 6.69 trillion won a year prior.
Overall revenue rose 69 per cent year on year to 133.9 trillion won.
Narrowing gap with SK Hynix
Samsung has been trying to narrow the gap with compatriot SK Hynix in supplying high bandwidth memory (HBM) chips to Nvidia, having fallen behind to the detriment of both profit and share price.
SK Hynix last week reported a quarterly profit record with a fivefold jump in earnings and forecast a prolonged chip industry boom, downplaying any concern about profit margins for chips nearing their peak.
Samsung said it has started the industry’s first mass-production sales of HBM4 chips for Nvidia’s Vera Rubin platform.
It added that it expects to increase capital expenditure sharply in 2026 to meet AI demand.
Still, it is bracing for potential production disruption as unions representing the majority of its workers in South Korea, especially in its chip division, consider striking over pay.
Samsung said it “plans to respond to the fullest extent through a dedicated organisation and response system to ensure that production is not disrupted”.
Soaring chip prices hit mobile profit
Rising prices of conventional memory chips dragged on Samsung’s other businesses such as mobile phone and display.
It said its mobile and network division will see profitability decline in 2026, weighed down by rising component costs. Profit in the division fell 35 per cent in the first quarter to 2.8 trillion won.
Its display division, which supplies flat-screen displays for customers such as Apple, saw operating profit fall 20 per cent to 400 billion won.
“While demand for semiconductors is set to increase due to the growth of the AI industry, a conflicting business environment is anticipated as the cost of IT products rises,” Samsung said. REUTERS
