Samsung's Q1 Operating Profit Soars 931.25%!

On April 5th, Samsung Electronics disclosed its preliminary financial results for the first quarter of 2024, showcasing a remarkable resurgence in profitability. The company reported an operating profit of approximately 66 trillion Korean won (approximately 35.376 billion Chinese yuan), representing an astounding 931.25% year-on-year increase. This performance marks a significant reversal from six consecutive quarters of decline since the third quarter of 2022, even surpassing the full-year operating profit of 2023, which stood at 65.7 trillion Korean won.

In terms of revenue, Samsung Electronics recorded a year-on-year growth of 11.37% in the first quarter of 2024, reaching 71 trillion Korean won. This milestone signifies the first time in five quarters since April 2022 that the company's quarterly revenue has exceeded 70 trillion Korean won. Despite surpassing brokerage expectations by over 20%, Samsung has yet to unveil the performance of its individual business segments. The comprehensive financial report, encompassing departmental performances, is slated for release by the end of April.

Samsung's impressive performance in the first quarter of 2024 can be attributed primarily to its strategic reduction in memory chip production since the first quarter of 2023. This decision not only helped narrow losses in the semiconductor business but also accelerated the ongoing recovery of demand and prices in the memory chip market. By the fourth quarter of 2023, Samsung's DRAM business had already returned to profitability.

Furthermore, the sustained increase in memory chip prices over recent quarters has contributed significantly to Samsung's performance. Beginning as early as the fourth quarter of the previous year, the company initiated price hikes for its memory chips. Following a 10% to 20% increase in NAND Flash chip prices in the fourth quarter of last year, Samsung announced plans for an additional 20% increase in prices for the first and second quarters of 2024, far surpassing industry expectations. Reports also indicated that Samsung and Micron are contemplating a 15% to 20% increase in DRAM prices for the first quarter of this year.

According to previously released financial data from Micron, the average price of DRAM in the second quarter (ending February 29, 2024) surged by 10%, while the average price of NAND Flash witnessed an increase of over 30%.

Export data released by South Korea further corroborates the semiconductor industry's rebound, with March 2024 witnessing a 35.7% increase in semiconductor exports compared to the same period in 2023, amounting to $11.7 billion. This marks the highest export level since March 2022.

Kyung Kye-hyun, responsible for Samsung's semiconductor business, expressed optimism at the company's annual shareholders' meeting, anticipating a return to the performance levels of 2022 as the memory market downturn subsides. Indeed, Samsung had already achieved an average quarterly operating profit exceeding 10 trillion Korean won in 2022.