Memory prices are skyrocketing! Samsung's Q1 profits surged eightfold, and Q2 will raise prices by another 30%

This Tuesday, Samsung Electronics, the world’s largest memory chip manufacturer, released preliminary first-quarter financial results: Samsung expects its first-quarter operating profit to reach an all-time high, growing more than eightfold year over year and far exceeding market expectations. The reason is that a surge in demand for artificial intelligence infrastructure has created a supply bottleneck for memory chips, pushing chip prices sharply higher.

And amid the hot demand for memory chips, Samsung Electronics has already completed DRAM pricing negotiations with major customers for the second quarter and signed supply agreements; the price is up by about 30% versus the first quarter.

Samsung Q1 operating profit surges 8x

Samsung estimates that during the first quarter (January to March), its revenue will grow 68% year over year to 133 trillion won (about RMB 60.7072 billion);

while operating profit will be 57.2 trillion won (about RMB 26.1087 billion), far surpassing analysts’ expectations of 40.6 trillion won tracked by LSEG, up more than eightfold from the same period last year.

Samsung’s prior quarterly operating profit record was set in the fourth quarter of last year at 20 trillion won (about RMB 9.1289 billion), while this year’s first-quarter operating profit outlook has increased by nearly two times quarter over quarter.

Against the backdrop of a global artificial intelligence data center boom, it’s not only AI chips—traditional chip supplies for smartphones, personal computers, and game consoles are also constrained, causing memory chip prices to rise by nearly 100% in the first quarter alone.

Q2 price increase of another 30% confirmed

According to reports from Korean media, Samsung Electronics has completed second-quarter DRAM price negotiations with major customers and signed supply agreements; the price is up about 30% from the first quarter.

This round of price increases covers high-bandwidth memory (HBM) as well as general-purpose DRAM products used in servers, PCs, and mobile devices, representing the overall average increase. Previously, Samsung raised the average DRAM price by about 100% in the first quarter.

If the DRAM price at the beginning of 2025 is used as the baseline, after two rounds of price hikes, the second-quarter supply price is equivalent to 2.6 times the baseline price.

An industry insider familiar with the situation said:

“Right now, there are still a large number of customers competing to lock in DRAM supply in advance, which allows the company to further raise prices on top of the first-quarter pricing… With strong AI demand, there are no signs that prices will stabilize or fall.”

Reports say SK hynix and Micron Technology will also move forward with their second-quarter DRAM supply agreements and have already begun detailed negotiations with customers on the price increases and contract terms.

The statements from the three memory manufacturers indicate that downstream buyers will face mounting price pressure, leaving limited room for negotiations.

Samsung has won the ‘turnaround battle’

At a time when Samsung seems to be enjoying a streak of good fortune, many people may have already forgotten that about a year ago, Samsung was still stuck in a period of operating difficulty.

一 year ago, because Samsung lagged behind its competitors in developing and ramping HBM chips into mass production, the company’s performance and stock price remained weak, and even the company’s CEO publicly apologized for it.

But now, with its latest HBM4 chips, Samsung has gradually narrowed the gap with its competitor SK hynix. At the same time, thanks to a rebound in AI inference demand, demand for its traditional chips has also been picking up.

Also benefiting from the AI boom, last month, U.S. memory chip maker Micron Technology said it expects revenue in its third fiscal quarter (ending at the end of May) to be higher than Wall Street’s expectations. Previously, the company delivered record profits in the second quarter (ending at the end of February) due to strong AI demand and tight supply.

(Source: Caixin Financial Network)