Samsung Q1 profit outperforms on chip stockpiling, smartphone demand ahead of US tariff threats

Samsung Electronics surprised markets on Tuesday with a better-than-expected first-quarter operating profit, driven by strong memory chip sales and high demand for its Galaxy S25 smartphones—partly fuelled by growing concerns over looming U.S. tariffs on tech imports.

The South Korean tech giant reported a projected operating profit of 6.6 trillion won ($4.49 billion) for the January–March period, only marginally lower than the 6.61 trillion won posted a year earlier, and significantly above analysts’ average forecast of 5.1 trillion won, according to LSEG SmartEstimate.

Analysts attribute the stronger-than-expected performance to customers stockpiling conventional and AI-focused memory chips, particularly ahead of potential tariff hikes proposed by the U.S. administration.

“While general memory prices dipped, strong demand from customers looking to secure inventory ahead of potential U.S. tariffs helped boost Samsung’s memory chip shipments,” said Greg Roh, head of research at Hyundai Motor Securities.

Shares of Samsung jumped 2.6% following the earnings announcement, outperforming the broader KOSPI index, which gained 1.6% in early trading.

The launch of the Galaxy S25 series earlier this year with upgraded AI features has been well received. Analysts say North American buyers, wary of U.S. trade policies, rushed to purchase smartphones in bulk ahead of anticipated tariffs, boosting Q1 shipments.

“Preemptive smartphone shipments by North American customers ahead of the tariffs likely contributed to first-quarter results,” Roh added.

Despite the upbeat Q1, Samsung could face a tougher second quarter. Analysts expect smartphone shipments to taper off as early orders are fulfilled, and concerns remain over slow uptake of high-bandwidth memory (HBM) chips.

Samsung’s foundry business, its chipmaking operations for clients like Nvidia, Qualcomm, and AMD, also continues to struggle. Export controls targeting AI chips bound for China, Samsung’s largest semiconductor market, are expected to weigh on revenue.

Samsung is also undergoing a leadership reshuffle following the recent death of co-CEO Han Jong-Hee. Detailed Q1 results are expected on April 30.

At its recent shareholder meeting, executives acknowledged a lag in responding to the AI chip boom, but signalled optimism about a recovery in the second half of the year, driven by rising demand for smartphones and data centres.

The company plans to start supplying its upgraded HBM3E 12-high chips to Nvidia mid-year, hoping to regain momentum in the booming AI market.

Meanwhile, South Korea’s SK Hynix and Micron have echoed similar sentiments about pre-tariff stockpiling, though both remain cautious about declaring a full-fledged rebound.