Tech giant Samsung Electronics estimated on Tuesday that its first-quarter profit had soared 755 percent annually to a record high of 57.2 trillion won, or US$37.9 billion, driven by strong sales of chips crucial for artificial intelligence.

The South Korean government has pledged to become one of the world's top three AI powers, alongside the United States and China.

Samsung has emerged as a key player – along with fellow South Korean firm SK Hynix – in the supply of high-performing chips in demand from companies racing to keep up with the fast-evolving AI industry.

The company also said in a regulatory filing that its sales were expected to reach US$88 billion in the three months to the end of March, a 68 percent increase compared to a yea ago.

The strong outlook come despite the risk posed to the global semiconductor supply chain if the war in the Middle East drags on.

A South Korean ruling party lawmaker said last month that officials from Samsung and other companies had raised concerns about potential disruption to chip production if some key supply chain materials, such as helium, could not be sourced from the Middle East.

"Samsung Electronics achieved its highest-ever results, driven by rising revenue and profits in its memory-focused device solutions division," a Samsung spokesman said.

He said the firm's competitiveness in home appliances and smartphones had helped to boost earnings.

The operating profit – more than an eight-fold increase from 6.69 trillion won a year earlier – was 36.7 percent higher than the average estimate, South Korea's Yonhap news agency reported, citing its own data firm.

With growing demand for memory chips, Samsung is expected to see "even better figures" in the months ahead, analyst Ryu Hyung-keun of Daishin Securities said.

"As we are seeing a surge in memory chip prices, its profit margins will improve further for the remainder of the year," he said.

But the company is facing risks, said Kim Dae-jong, a business professor at Sejong University.

"A labour union strike scheduled for next month and the war in Iran are weighing on the outlook," he said.

"The Middle East is Samsung's key market for home appliances, and demand from the region is significant, making it a source of concern."

Meanwhile, LG Electronics, South Korea's second-largest appliance maker after Samsung, also projected record first-quarter revenue of 23.73 trillion won. (AFP)
Samsung is expected to disclose its final quarterly earnings report at the end of April. (AFP)




Edited by Robert Kemp