Samsung forecast beats market expectations for first quarter

Samsung Electronics on Tuesday announced a record first quarter sales forecast and said it saw a better-than-expected performance for profits, even as analysts warned US tariffs could soon impact the South Korean tech giant.

The announcement came a day after a stock market rout in Asia and Europe sparked by China's retaliation against steep US tariffs and President Donald Trump's refusal to back down despite the turmoil.

In a regulatory filing, Samsung predicted its January-March operating profits to rise to 6.6 trillion won ($4.5 billion), down 0.15 percent from a year earlier but up nearly two percent on the previous quarter.

This was almost 34 percent higher than the average estimate, according to South Korea's Yonhap news agency, which cited its own financial data firm.

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy.

It is a chip powerhouse, and one of the world's largest makers of mobile phones.

Samsung said sales were also seen increasing to 79 trillion won, a near 10 percent jump from a year earlier, marking the highest first-quarter figure on record and the second-highest quarterly revenue ever.

The company did not disclose its net income or the detailed earnings of its business divisions.

However, experts warn Trump's tariffs could heavily impact Samsung as more than half of its smartphones are made in Vietnam, which now faces a 46 percent US duty.

"Samsung's consensus-beating first-quarter operating profit implies its popular product offerings, such as Galaxy smartphones, could weather a tough business environment, when combined with strong cost control capabilities," Bloomberg Intelligence analysts said.

"Yet the pace of profit growth might slow in the second quarter given most of its smartphones are made in Vietnam, which subjects them to US import tariffs."

- 'Substantial tariffs' -
 

The high figures forecast were partly down to record sales of the new Galaxy S25 series phone, which was released in February, experts said.

The gadget became the fastest ever Galaxy device to reach one million units sold in the shortest time -- within 21 days.

Samsung also benefited from strong demand for server DRAM -- mostly used in data centres -- which offset slowing prices for more conventional high-end chips, TrendForce analyst Tom Hsu told AFP.

There was "strong purchase momentum" from some US and Chinese cloud service providers, who were investing in their data centres, he said.

But "with the US government imposing substantial tariffs, leading to a potential for economic uncertainties", demand is likely to fall, which could hit prices, he added.

Because of US rules limiting the export of AI chips to China, and Beijing's push to use more local suppliers, fewer orders are going to companies like Samsung, TrendForce analyst Joanne Chiao told AFP.

"Because of this, Samsung Foundry's sales are expected to go down in the first quarter of 2025 compared to the previous quarter," said Chiao.

Looking ahead, "geopolitical factors" are making it harder for some of Samsung's Chinese customers to use advanced technology.

"This is dampening overall demand momentum," said Chiao and as a result, slowing Samsung's total sales growth in 2025.

Shares in Samsung rose more than two percent in Seoul on Tuesday.

The firm said it had no comment when contacted by AFP.