Samsung Q1 profit is estimated to drop by 21%, with the earnings report set to be released on April 8. The South Korea-based company is expected to forecast a lower profit because of slow AI chip sales and consistent losses in its contracting chip manufacturing business. Samsung is one of the biggest makers of memory chips. It is going through a management reshuffle because of the sudden death of co-CEO Han Jong Hee. Samsung will present its Q1 earnings report on Tuesday.
Since July 2024, Samsung has been losing profit because of a large drop in AI chip sales. It lagged behind its main competitor, SK Hynix, in providing high-performance memory chips to Nvidia, the leader in AI chips. Samsung Q1 profit is expected to remain low with the increasing US tariff and low demand in the high-end market.
Samsung Q1 Forecast: What to Expect?
According to LSEG SmartEstimate, Samsung is expected to report an operating profit of 5.2 trillion won ($3.62 billion) for the January-March quarter, down from 6.6 trillion won last year. While Samsung is working on a new version of its advanced HBM chips for key clients, its heavy reliance on commodity chips makes its profits more vulnerable to price swings, analysts say.
Prices for DRAM memory chips, used in smartphones and PCs, dropped 25% in Q1, while NAND flash chips for data storage fell by about 50%. As a result, Samsung is likely to fall behind SK Hynix, whose profits are expected to more than double, thanks to strong AI chip demand. Samsung’s chip division is expected to make an operating profit of 1.7 trillion won in Q1, slightly down from 1.9 trillion won last year.
Meanwhile, the mobile and network business is likely to see a profit of 3.7 trillion won, up from 3.5 trillion won a year ago, thanks to more smartphone shipments and a drop in the local currency, which boosts earnings from abroad.
Samsung’s AI Chip Sales: Facing a Slump!
Samsung has become heavily reliant on Chinese customers, searching for nonadvanced products, which do not have export restrictions in the US as it struggles in the high-end market. Samsung is expected to push back the opening of its new U.S. factory to 2027 instead of 2026, as it has not secured major production orders yet, keeping its chip business in the red, according to analysts. The plant was originally set to open in 2024.
Samsung Stock Update
Samsung’s stock has seen some fluctuations this week, reflecting concerns over its declining chip sales and market uncertainty. As the company prepares to release Samsung Q1 earnings, investors can expect a profit dip, especially in its semiconductor division, due to lower chip prices. While the mobile and network business shows some promise, overall, the outlook remains cautious.
