New Delhi

Samsung Electronics anticipates a remarkable surge in its first-quarter operating profit.

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According to Reuters, the company’s profit is expected to increase more than tenfold, surpassing market predictions.

This surge is primarily attributed to the recovery in chip prices, pushed by an increase in demand for artificial intelligence (AI).

Although the forecast was promising, Samsung's stock faced a decline.

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Early Friday, the company's shares dropped by 1.3 per cent, coming along with a 1.1 per cent decrease in South Korea's broader market.

Investors seem to be anxious for updates on Samsung's high-end memory chip business, which has been trailing behind its competitors.

Samsung estimated its operating profit to be around 6.6 trillion won ($4.89 billion) for the quarter ending on March 31.

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This figure surpassed the 5.7 trillion won predicted by LSEG SmartEstimate.

Compared to the same period last year, this marks an increase of 931 per cent.

This expected profit could be Samsung's highest since the third quarter of 2022.

However, it wasn't all positive news for Samsung. Although the operating profit exceeded expectations, the company's revenue fell short.

The revenue is projected to rise by 11 per cent year-on-year, reaching 71 trillion won. This figure is slightly below the 72.3 trillion won predicted by LSEG SmartEstimate.

Park Sung-soon, an analyst at Korea Investor Relations Service, commented on the company's performance.

“Since revenue was mostly in line but operating profit beat expectations, the inventory valuation of NAND flash chips may have improved," Reuters quoted him as saying.

Sung-soon also highlighted the positive reception of the new Galaxy S24 smartphones.

He suggested that the on-device AI and high-margin premium smartphones could impact the company's performance positively.

Samsung's chip division, historically its largest revenue generator, is on track to report its first quarterly profit in five quarters. This turnaround is due to the rebound in memory chip prices.

The price of DRAM chips rose by about 20 per cent in the first quarter compared to the previous quarter. Meanwhile, NAND flash chip prices surged between 23 per cent to 28 per cent.

Analysts remain optimistic about Samsung's future in the chip market. Despite lagging behind its competitor SK Hynix in the booming HBM market, Samsung is expected to catch up.

The company plans to launch its latest and most powerful HBM chips in the third quarter.

The recent 7.2-magnitude earthquake in Taiwan is likely to impact semiconductor supply. Analysts believe that both Samsung and SK Hynix might raise memory chip prices more than initially planned. This move could potentially strengthen their second-quarter earnings.

In the mobile business segment, Samsung is expected to report a solid profit. This expectation follows the launch of its flagship Galaxy S24 smartphones in late January.

According to Reuters, Eugene Investment & Securities estimates that Samsung shipped 57 million smartphones during the quarter, an 8 per cent increase from the previous quarter.

The average selling price of Samsung smartphones also rose by 30 per cent to $340 quarter-on-quarter.

Counterpoint data provider reported that global sales of Galaxy S24 smartphones increased by 8 per cent compared to the previous Galaxy S23 series during the first three weeks of availability.

Samsung is set to release detailed earnings on April 30.

(With inputs from Reuters)