Tech giant Samsung Electronics increased its earnings guidance for the first quarter of the year on Tuesday. It comes following a surge in sales ahead of expected US tariffs on chip imports.
The company expects consolidated sales to come in at about 79 trillion Korean won (€48.8 billion), with consolidated operating profit estimated to be around 6.6 trillion Korean won (€4.1 billion).
The consolidated operating profit estimate for the first quarter of 2025 is more than than the 5.2 trillion Korean won (€3.2 billion) predicted by the London Stock Exchange Group’s StarMine SmartEstimates model.
Similarly, the consolidated sales guidance is an increase of almost 10% year-on-year from the company’s Q1 2024 consolidated sales figure.
Samsung’s shares closed 0.6% higher on the Korea Exchange on Tuesday following the update.
This updated guidance comes as Samsung continues to experience a boost in sales, driven mainly by better-than-expected demand for its DRAM chips and its flagship artificial intelligence smartphones.
This flurry of buying activity has been exacerbated by the expectation of US tariffs on chip imports in the coming months.
Although most semiconductors are currently exempt from US tariffs, following his Liberation Day speech, US president Donald Trump threatened that levies on chip imports would be implemented very quickly too. This has supported demand for both less sophisticated and advanced ‘legacy’ chips.
Samsung continues to face woes despite boom in sales
Although Samsung has benefited from rising chip sales, underlying hurdles remain. This includes falling prices, growing losses in contract manufacturing, and late shipments of artificial intelligence chips.
The company is also redesigning the best of its High Bandwidth Memory (HBM) products, in order to satisfy Nvidia’s selection criteria for Samsung’s AI chips. Increasing losses at Samsung’s foundry business, which produces chips for external clients, have also impacted the company. This is mainly because of the foundry business struggling to increase yields and grow its client base.
Ongoing tough competition from rival chipmaker SK Hynix has made it harder for Samsung to establish itself more strongly in the semiconductor market. This is mainly because of SK Hynix’s considerable investments in HBM development and early entry into the market. SK Hynix also has a strong, established relationship with major clients such as Nvidia already.
Current and upcoming US tariffs could also force Samsung to rethink its production and sales strategy, which may involve moving some of its manufacturing facilities to more favourable locations.
The company is facing delays in the start-up of its new US factory in Taylor, Texas. Although the company expected to start production at this plant in the second half of 2024, this has now been pushed back to 2026. This is mainly because of struggles in securing major clients for its foundry business.
