Samsung Electronics Q1 Operating Profit 9.38 Trillion Won... Home Appliances and Mobile Soar, Semiconductor Slows (Update)

[Asia Economy Reporter Jeong Hyunjin] Samsung Electronics posted an operating profit of 9.38 trillion KRW in the first quarter despite semiconductor sluggishness due to production disruptions at its Austin, USA plant, while smartphones and home appliances showed strong performance.

On the 29th, Samsung Electronics announced that its consolidated sales for the first quarter of this year reached 65.39 trillion KRW, with an operating profit of 9.38 trillion KRW. Sales increased by 6.2% compared to the previous quarter, driven by strong smartphone sales despite the display sector's off-season in the first quarter. Compared to the same period last year, sales grew 18.2%, mainly due to strong sales of set products such as smartphones, TVs, and home appliances. This marks the highest sales ever recorded for a first quarter. Operating profit increased by 45.4% year-on-year, supported by improved profitability in the smartphone and consumer electronics (CE) divisions despite the display off-season and a decline in semiconductor performance.

By division, the Device Solutions (DS) segment, including semiconductors, recorded first-quarter sales of 19.01 trillion KRW and an operating profit of 3.37 trillion KRW. Although memory shipments centered on PCs and mobiles were favorable, NAND prices continued to decline and some initial costs for new production lines impacted results. In particular, production was halted at the Austin plant due to a cold wave in the US in February, causing a decrease in profits compared to the previous quarter. The display segment saw profits decline quarter-on-quarter due to weak demand in small and medium-sized displays during the off-season, but profits improved significantly year-on-year due to increased OLED utilization rates.

The IT & Mobile Communications (IM) division, responsible for smartphones, posted sales of 29.21 trillion KRW and an operating profit of 4.39 trillion KRW, while the CE division recorded sales and operating profit of 12.99 trillion KRW and 1.12 trillion KRW, respectively. Samsung Electronics explained that the wireless segment saw a significant increase in sales of flagship and mid-to-low-end smartphones, along with expanded contributions from Galaxy ecosystem products such as tablets, PCs, and wearables, leading to substantial profit improvements both quarter-on-quarter and year-on-year. The CE division experienced increased profits compared to the previous quarter and the same period last year, driven by continued pent-up demand for home appliances due to COVID-19 and expanded sales of premium TV products.

Capital expenditures in the first quarter amounted to 9.7 trillion KRW, with 8.5 trillion KRW allocated to semiconductors and about 700 billion KRW to displays. Samsung Electronics stated that investments in memory focused on expanding advanced processes and process transitions at the Pyeongtaek and Xi'an plants to respond to increased demand, while foundry investments centered on expanding advanced processes such as extreme ultraviolet (EUV) 5-nanometer (nm; 1 nm is one-billionth of a meter) technology.

Samsung Electronics forecasted that semiconductor performance is expected to improve in the second quarter due to better memory market conditions, but the IM division's performance may slow due to reduced effects from new wireless product launches. The CE division plans to actively expand sales of new TV products such as 'Neo QLED' and capture demand from sports events, while home appliances will pursue sustained growth through global expansion of the Bespoke line.