Samsung reports amazing Q1 profit despite lower smartphone margins
Samsung's stock is up 90% for the year-to-date.
Samsung stuns with strong Q1 earnings. | Image by PhoneArena
What a difference a year makes, especially if you are Samsung. The South Korean company reported first quarter 2026 profit of 57.2 trillion won ($89.96 billion), 750% above the Q1 2025 profit and a new company record.
Samsung made more profits in Q1 2026 than it made in all of 2025
The first quarter 2026 profit alone topped the bottom line figure of 43.6 trillion won ($29.33 billion USD) that Samsung made during all of last year. The report also revealed that the company continues to show strong earnings momentum after it reported what was then a record profit of 20.1 trillion won for the fourth quarter of 2025. But Samsung made short work of that record, more than doubling that figure during the first quarter of 2026.
The main driver of the record setting Q1 for Samsung was its chip business, which benefited from strong demand for memory chips as a result of the global boom in AI data centers. This demand has sharply reduced supply of these chips forcing prices to appreciate sharply as smartphone manufacturers pay higher prices for these memory chips.
Samsung's memory chip business saw its operating profit rise from 1 trillion Korean won to 53.7 trillion won
Samsung's chip unit is known as its DS (Device Solutions) division and includes its memory chip business, its semiconductor design business, and Samsung Foundry. The latter manufactures chips based on other companies designs and also builds them for internal Samsung business units.
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The DS unit generated an operating profit of 53.7 trillion won ($36.12 billion USD) in the first quarter, a huge increase from the 1 trillion won in operating profit that this business unit reported for Q1 of 2025. The operating profit generated by Samsung's DS unit during Q1 of 2026 was responsible for more than 90% of Samsung's total first quarter earnings.
The company benefited from demand for high-bandwidth memory used by AI data centers
Samsung's overall chip sales during the first quarter of 2026 rose by 225% year-over-year to 81.7 trillion won ($54.98 billion USD). Helping Samsung report such massive annual gains in performance has been strong demand for HBM (high-bandwidth memory) used in the chips earmarked for AI data centers.
Samsung is closing the gap with rival SK hynix in the market for high-bandwidth memory. | Image by Samsung
With supplies of HBM chips low, chip designers such as Nvidia have helped push up demand for HBM. Nvidia is the world's most valuable publicly traded company with a valuation in excess of five trillion dollars.
Samsung's shares are up sharply for the year-to-date
Samsung said in its earnings report that it has "surpassed its quarterly sales record by addressing high-value-added AI demand despite limited supply availability, with industry-wide memory price increases also a contributing factor." The company announced in February that it was the first to mass-produce HBM4 memory chips and deliver them to customers beating domestic rival SK Hynix, another South Korean memory chip company.
Ray Wang, an analyst at SemiAnalysis, said this about Samsung closing the HBM gap with SK hynix: "Samsung has made improvements in HBM4 and the gap against SK hynix is narrower versus previous generations of HBM." Still, Wang says that SK hynix will continue to lead the HBM market against its peers
Samsung's Mobile Experience (MX) unit, the segment of the company that develops and manufacturers smartphones, faced pressure on its profit margins due in part to the higher price it had to pay for memory chips.
After the earnings were announced, shares of Samsung rose 0.9%. For the year-to-date, Samsung's stock has risen approximately 90%. Samsung's current market capitalization is 1.45 quadrillion won ($1.05 trillion USD) and it has risen sharply this year along with its stock.
Samsung's valuation still pales next to Apple's $3.97 trillion and Google's $4.33 trillion (Google makes up most of the valuation of its parent company Alphabet). Samsung is valued higher than its HBM rival SK hynix as the latter has a market cap of $622.45 billion.
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