Introduction to Samsung’s Quarterly Performance
Samsung Electronics has posted a record quarterly revenue of KRW 79.14 trillion ($55.4 billion) in the first quarter of 2025, marking a 10% increase year-over-year. This achievement is largely attributed to the company’s strategic focus on artificial intelligence (AI). Despite navigating through challenges in the semiconductor market and growing global trade uncertainties, Samsung’s operating profit climbed to KRW 6.7 trillion ($4.68 billion), representing a modest 1.5% increase compared to the same period last year.
Smartphone Success Counters Chip Challenges
The Mobile Experience (MX) Business emerged as the best performer, contributing KRW 37 trillion in consolidated revenue and KRW 4.3 trillion in operating profit – its highest level in four years. The success was driven primarily by strong sales of the flagship Galaxy S25 series, which features AI abilities via Galaxy AI. Enhanced cost competency and price declines for some components also contributed to solid double-digit profitability. In contrast, Samsung’s Device Solutions (DS) Division, which includes its semiconductor operations, faced challenges, posting KRW 25.1 trillion in revenue and KRW 1.1 trillion in operating profit – a 42% decline from the previous year.
Challenges in the Semiconductor Market
The performance of the DS Division reflects ongoing challenges in the semiconductor market, particularly in high-bandwidth memory (HBM) sales. The erosion of average selling price (ASP) and a decrease in HBM sales due to export controls on AI chips and deferred demand in anticipation of upcoming enhanced HBM3E products impacted overall earnings.
Trade Tensions Cloud Future Outlook
Despite the record revenue, Samsung has expressed caution about the second quarter, dropping its usual business outlook due to growing macroeconomic uncertainties stemming from global trade tensions and slowing economic growth. The company is concerned about US President Donald Trump’s "reciprocal" tariffs, which threaten to impact dozens of countries, including Vietnam and South Korea, where Samsung produces smartphones and displays. While Samsung’s flagship products are currently exempt from these tariffs, the company is communicating with related countries to minimize negative effects.
Response to Challenges
In response to its challenges, Samsung is considering relocating production of TVs and home appliances. The company remains committed to its artificial intelligence strategy, allocating its highest-ever annual R&D expenditure for 2024. In the first quarter of 2025, Samsung increased R&D spending by 16% compared to the same period last year, amounting to KRW 9 trillion.
AI Investment and Future Strategy
For the remainder of 2025, Samsung plans to expand its AI smartphone lineup through the introduction of "Awesome Intelligence" to the Galaxy A series and the launch of the Galaxy S25 Edge in Q2. Later in the year, the company will strengthen its foldable lineup with enhanced AI user experiences. In the semiconductor space, Samsung aims to strengthen its position in the high-value-added market through its server-centric portfolio and the ramp-up of enhanced HBM3E 12H products to meet initial demand.
Market Expectations
The company expects AI-related demand to remain high in the second half of 2025, coinciding with the launch of new GPUs. Samsung’s foundry business remains focused on its 2nm Gate-All-Around (GAA) process development, which remains on schedule despite current challenges.
Market Reaction and Competitive Landscape
Samsung shares were trading down approximately 0.6% following the announcement, reflecting investor concerns about the uncertain outlook. The results highlight Samsung’s complex position in the AI market – succeeding in consumer-facing applications while working to catch up with competitors in AI-specific semiconductor components. Local rival SK Hynix has overtaken Samsung in overall DRAM market revenue for the first time, capturing 36% global market share compared to Samsung’s 34%.
Conclusion
Samsung’s record revenue masks a pivotal crossroads for the tech giant: while its AI-enhanced smartphones flourish, its once-dominant semiconductor business risks falling behind in the AI revolution. The coming quarters will reveal whether Samsung’s massive R&D investments can reclaim lost ground in HBM chips, or if we’re witnessing a fundamental power shift in Asian tech manufacturing that could alter the global AI supply chain for years to come.
FAQs
- Q: What were Samsung’s quarterly revenue and operating profit in the first quarter of 2025?
- A: Samsung posted a record quarterly revenue of KRW 79.14 trillion ($55.4 billion) and an operating profit of KRW 6.7 trillion ($4.68 billion).
- Q: What drove Samsung’s success in the first quarter of 2025?
- A: The success was driven primarily by strong sales of the flagship Galaxy S25 series, which features AI abilities via Galaxy AI, and enhanced cost competency.
- Q: What challenges is Samsung facing in the semiconductor market?
- A: Samsung is facing challenges in the semiconductor market, particularly in high-bandwidth memory (HBM) sales, due to the erosion of average selling price (ASP) and decreased demand.
- Q: How is Samsung responding to global trade tensions and slowing economic growth?
- A: Samsung is considering relocating production of TVs and home appliances and is communicating with related countries to minimize negative effects.
- Q: What are Samsung’s plans for its AI smartphone lineup and semiconductor space in 2025?
- A: Samsung plans to expand its AI smartphone lineup and strengthen its position in the high-value-added market through its server-centric portfolio and the ramp-up of enhanced HBM3E 12H products.
