Samsung Electronics’ strategic focus on AI led to high revenues in the first quarter of 2025. This is because South Korea’s technology giants are navigating challenges in the semiconductor market and increasing uncertainty in global trade.
The company recorded a quarterly KRW of 79.14 trillion ($55.4 billion), marking a 10% increase from a year ago, according to financial results released on Wednesday. Operating profit rose to KRW 6.7 trillion ($4.68 billion), representing a modest increase of 1.5% compared to the same period last year.
The results exceeded previous forecasts of Samsung’s KRW 79 trillion units and analyst expectations.
Smartphone success fights the challenges of chips
The Mobile Experience (MX) business emerged as the best performance, contributing $37.37 trillion in integrated revenue and 4.3 trillion in operating profit. This is the highest level in four years. This success was driven by the strong sales of the flagship Galaxy S25 series, which is primarily characterized by AI capabilities via Galaxy AI.
“The cost competency and lower prices for some components also contributed to solid double-digit profitability,” the company’s revenue report states.
In contrast, Samsung’s Device Solutions (DS) division, which includes semiconductor operations, saw KRW revenues and operating profit of $1.1 trillion, down 42% from the previous year. This performance reflects the ongoing challenges in the semiconductor market, particularly in the sales of high-bandwidth memory (HBM).
“Overall revenue was affected by the effects of erosion of average selling price (ASP) and the decline in HBM sales due to AI chip export control and deferral of demand,” Samsung said.
Future outlook for trade tension cloud
Despite record revenue, Samsung has expressed caution about the second quarter, lowering the normal business outlook due to increased macroeconomic uncertainty caused by global trade tensions and slowing economic growth.
“Due to the rapid changes in policy and geopolitical tensions in major countries, it is difficult to accurately predict the impact of tariffs and established measures on businesses,” a Samsung executive said in a revenue call on Wednesday.
Of particular concern are President Donald Trump’s “mutual” tariffs, most of which were suspended until July, but threatens to affect dozens of countries, including Vietnam and South Korea, where Samsung produces smartphones and displays.
Samsung pointed out that flagship products such as semiconductors, smartphones and tablets are currently exempt from these duties, but the company revealed that Washington is conducting product-specific tariff investigations in these categories.
“There is a lot of uncertainty ahead of us (…) we are communicating with the relevant countries to minimize the negative impact,” Samsung said over the phone.
In response to that challenge, the company has revealed that it is considering moving its production of television and home appliances.
AI Investment and Future Strategy
Despite these headwinds, Samsung is committed to an artificial intelligence strategy, allocating its highest annual R&D spending ever in 2024. In the first quarter of 2025, the company increased its R&D spending by 16% compared to KRW 9 trillion.
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 by enhancing its AI user experience.
In the semiconductor space, Samsung aims to strengthen its position in high value-added markets through a server-centric portfolio and ramp-up of its HBM3E 12H products, which have been enhanced to meet initial demand. The company expects high AI-related demand in the second half of 2025, coinciding with the launch of new GPUs.
“As on-device AI is expected to grow in the mobile and PC market, the memory business will actively respond to this change in the business environment with its industry-leading 10.7Gbps LPDDR5X products,” Samsung said.
The company’s foundry business focuses on 2NM Gate-All-Alound (GAA) process development, which remains on schedule despite current challenges.
Market reaction and competitive landscape
Samsung’s shares have fallen about 0.6% since the announcement, reflecting investors’ concerns about the uncertain outlook.
The results highlight Samsung’s complex position in the AI market. Successfully create consumer applications that are working to keep up with competitors of AI-specific semiconductor components.
According to CounterPoint Research, local rival SK Hynix, which reported that it had increased its operating profit of 158% to KRW 7.4 trillion last week, surpassed Samsung for the first time in revenue in the DRAM market, gaining a 34% global market share.
The success of SK Hynix is particularly pronounced in high-bandwidth memory segments, which are critical for AI server applications.
“Samsung expects uncertainty to decrease and expects performance to improve later this year,” the company noted, shocking his cautiously optimistic tone despite the challenges ahead.
Samsung’s record revenues shatter the vital intersection for tech giants. While AI-enhanced smartphones are thriving, the semiconductor business that once dominated it is lagging behind in the AI revolution.
Future accommodations will reveal whether Samsung’s massive R&D investment can regain lost ground with HBM chips or whether they witness a fundamental power shift in Asian technology manufacturing that could change the global AI supply chain for years to come.
For companies that have rebuilt their 56-year history many times, AI semiconductor racing could prove to be the most consequential transformation.
(Image credit: Humanity)
reference: Baidu Ernie X1 and 4.5 Turbo boast low cost and high performance
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