Samsung Reports Record Revenue Through AI Strategy Amid Semiconductor Challenges

Samsung Electronics' focus on artificial intelligence has yielded significant revenue in the first quarter of 2025, as the South Korean tech leader maneuvers through semiconductor market challenges and increasing global trade uncertainties.

The company announced a record quarterly revenue of KRW 79.14 trillion ($55.4 billion), a 10% rise from the previous year, according to its financial results disclosed on Wednesday. Operating profit rose to KRW 6.7 trillion ($4.68 billion), showing a slight increase of 1.5% compared to the same period of the previous year.

The financial performance surpassed Samsung's earlier projection of KRW 79 trillion and outpaced analysts' predictions.

The Mobile Experience (MX) Business was the standout performer, generating KRW 37 trillion in consolidated revenue and KRW 4.3 trillion in operating profit – the highest in four years. This success was mainly due to robust sales of the flagship Galaxy S25 series, incorporating AI features via Galaxy AI.

"Improved cost efficiency and reduced component prices also facilitated solid double-digit profitability," stated the company's earnings report.

In contrast, Samsung's Device Solutions (DS) Division, which includes its semiconductor operations, reported KRW 25.1 trillion in revenue and KRW 1.1 trillion in operating profit – a 42% drop from the previous year, indicating ongoing challenges in the semiconductor market, especially in high-bandwidth memory (HBM) sales.

"Overall earnings were adversely affected by the decline in average selling price (ASP), along with reduced HBM sales due to export restrictions on AI chips and deferred demand ahead of the forthcoming enhanced HBM3E products," stated Samsung.

Despite the record earnings, Samsung expressed a cautious outlook for the second quarter, opting not to provide its traditional business guidance due to the aggravating macroeconomic uncertainties stemming from global trade tensions and the deceleration of economic growth.

"Given the swift policy changes and geopolitical tensions among major nations, it is challenging to precisely predict the business impacts of tariffs and implemented counterstrategies," a Samsung executive commented during Wednesday’s earnings call.

Of particular concern are tariffs enacted by the US administration, which, though mostly suspended until July, pose potential impacts on several countries including Vietnam and South Korea, where Samsung manufactures smartphones and displays.

Samsung acknowledged that its flagship offerings such as semiconductors, smartphones, and tablets are currently not subject to these tariffs, but observed that US authorities are conducting a tariff investigation specific to these product categories.

"We're facing numerous uncertainties [...] we are engaging with pertinent countries to mitigate negative impacts," Samsung stated during the call.

In light of its challenges, the company disclosed considerations to shift production of TVs and home appliances.

Despite these hurdles, Samsung stays devoted to its AI strategy, marking its highest-ever annual R&D allocation for 2024. In the first quarter of 2025, it boosted R&D spending by 16% compared to the previous year, totaling KRW 9 trillion.

For the remainder of 2025, Samsung plans to broaden its AI smartphone range with the introduction of "Awesome Intelligence" to the Galaxy A series and debut the Galaxy S25 Edge in Q2. Later in the year, the company aims to enhance its foldable range with further AI user experiences.

In the semiconductor arena, Samsung is set to bolster its presence in the high-value-added market with a server-centric portfolio and increased production of advanced HBM3E 12H products to fulfill initial demand. The firm anticipates that AI-related demand will stay strong in the latter half of 2025, synchronizing with the launch of new GPUs.

"In the mobile and PC markets, on-device AI is predicted to expand, and the Memory Business will actively adapt to this market shift with its leading-edge 10.7Gbps LPDDR5x products," Samsung remarked.

The company's foundry business remains committed to progressing its 2nm Gate-All-Around (GAA) technology, keeping to its planned schedule despite ongoing challenges.

Following the announcement, Samsung's shares traded around 0.6% lower, reflecting investor worries regarding the uncertain outlook.

The results underscore Samsung's intricate position in the AI landscape – thriving in consumer-oriented applications while striving to match rivals in AI-focused semiconductor segments.

Local competitor SK Hynix, which last week reported a 158% surge in operating profit to KRW 7.4 trillion, has surpassed Samsung in the overall DRAM market revenue for the first time, capturing a 36% global market share compared to Samsung's 34%, according to Counterpoint Research.

SK Hynix's triumph has been particularly notable in the high-bandwidth memory sector, essential for AI server functionalities.

"Samsung anticipates that should uncertainties diminish, its performance will improve in the latter half of the year," the company noted, adopting a cautiously optimistic view despite the imminent hurdles.

Samsung's unprecedented revenue figures are a testament to a pivotal moment for the tech giant: while its AI-powered smartphones thrive, its previously leading semiconductor business faces the risk of lagging in the AI wave.

The forthcoming quarters will determine whether Samsung's substantial R&D investments can recoup its HBM chip position, or whether this is indicative of a decisive power transition in Asian tech manufacturing that could reshape the global AI supply chain for years ahead.

For an organization that has repeatedly reinvented itself over its 56-year legacy, the current AI semiconductor race may prove to be its most significant transformation yet.

(Image credit: Anthropic)