The semiconductor division, Device Solutions, generated 53.7 trillion KOW in operating profit, representing about 94% of the group total, with sales rising 86% to 81.7 trillion KOW. Samsung is no longer merely riding a favorable cycle; it is benefiting from structural supply tightness in memory, where it holds the lion's share alongside SK Hynix and Micron. This trend is fueled by AI infrastructure build-outs, hyperscaler demand, and requirements for HBM, high-density DDR5, and server SSDs. Management indicated that server shipments grew in the low teens for DRAM and low twenties for NAND during the first quarter, with average selling prices up nearly 90% for DRAM and approximately 80% for NAND.
Visibility is also impressive for Samsung. The company asserts that its supply is significantly below customer demand and that requests already received for 2027 indicate an even more pronounced imbalance than in 2026. Multi-year contracts signed with certain customers, featuring more binding commitments than standard agreements, serve as a major signal: large buyers are seeking to secure volumes even before future capacity becomes available. This strengthens Samsung's visibility but also necessitates considerable investment discipline, as lead times for constructing new capacity remain long.
The delicate point concerns HBM. Samsung fell behind SK Hynix in supplying Nvidia, but now claims the first mass-production sales of HBM4 in February, notably destined for the Vera Rubin platform, and expects to more than triple its HBM revenue this year. HBM4 is projected to represent over 50% of HBM sales starting in the third quarter and roughly half for the full year. The paradox, acknowledged by management, is that the recent surge in conventional DRAM prices occasionally makes it more profitable in the short term than HBM. However, Samsung is choosing to maintain a balance between HBM and conventional memory to avoid undermining the very expansion of AI infrastructure that supports the cycle.
Other divisions serve as a reminder that the chip boom comes at a cost. In mobile, operating profit came in at 2.8 trillion KOW, but profitability is under pressure due to soaring memory component costs. Samsung forecasts a decline in MX profitability this year despite support from the Galaxy S26, premium models, and on-device AI. Displays are also suffering: the Display division posted only 400 billion KOW in operating profit, penalized by seasonality, memory costs, and softer demand.
The investment case thus presents very high-quality, albeit asymmetrical, results. The memory engine is firing on all cylinders, with prices, server volumes, and visibility rarely seen together. Conversely, and this is the flip side of the coin, dependence on the AI cycle is intensifying, the profit base is becoming highly concentrated, and several risks remain: a potential strike in South Korea between May 21 and June 7, rising logistics costs linked to oil, geopolitical tensions, and component pressure on downstream activities.
The share price decline following the publication, despite record operational performance, looks more like profit-taking after a nearly 84% YTD rally than a questioning of the industrial thesis. What the market may be underestimating is not so much the quarterly level as the orchestrated scarcity of capacity: Samsung is entering a phase where growth will depend as much on its allocation trade-offs as on demand itself.
