Samsung Electronics has sharply beaten market expectations from the first quarter. It posted an earnings surprise, with operating profit rising by nearly 20 trillion won above the highest estimate from securities firms. A surge in memory prices lifted results, but deeper dependence on semiconductors and weakness in non-chip divisions remained challenges.

Samsung Electronics on Monday announced preliminary consolidated results for the first quarter of 2026, with revenue of 133 trillion won and operating profit of 57.2 trillion won. The operating margin reached 43 percent. Before the preliminary release, securities firm estimates were 38 trillion won at Hana Securities, 41.3 trillion won at Mirae Asset Securities, 43 trillion won at Kiwoom Securities and 45.3 trillion won at iM Securities, and the result topped even the highest estimate. It was 8.5 times the 6,6900,000,000 won a year earlier and up 185 percent from 20.07 trillion won in the previous quarter.

The source of the outperformance appears to be memory semiconductors. Hana Securities estimated first-quarter operating profit at the semiconductor division at 35.3 trillion won, broken down into 27.2 trillion won for DRAM and 8.8 trillion won for NAND. With overall operating profit beating the estimate by more than 19 trillion won based on the preliminary figures, most of the gain is analysed as having come from memory.

March memory semiconductor export data support that view. The average daily memory semiconductor export amount in March rose 195 percent from a year earlier to $990 million. The average daily NAND export amount topped $100 million for the first time.

Securities firms had earlier estimated that first-quarter DRAM average selling prices would rise 60 percent from the previous quarter and NAND ASP would climb 55 percent. Given that the actual results exceeded even those estimates, the increase in ASP appears to have outpaced expectations further, or an improved product mix from a larger share of high-bandwidth memory operated at the same time. Hana Securities also said in a report that it observed memory prices remaining stronger than expected during March.

By contrast, non-semiconductor divisions are estimated to have been relatively weak. With operating profit at the MX/network division expected at 1.8 trillion won and an operating margin around 5 percent, profitability appears to have fallen from a year earlier, when it posted a 12 percent operating margin, despite the launch effect of a new Galaxy S26 model.

The non-memory business, including foundry, is estimated to have narrowed its loss by about 400 billion won from the previous quarter to around minus 1 trillion won, but it is analysed as not having turned profitable. The display division is seen staying at around 500 billion won in operating profit due to seasonal weakness.

◆Weak performance outside semiconductors...deepening concentration

Attention is on whether this trend will continue. Samsung Electronics' existing estimate for full-year operating profit was about 230 trillion won, but with the first-quarter result alone already reaching 25 percent of that estimate, it is likely to be revised upward.

Ultimately, a recovery in profitability outside semiconductors is expected to determine momentum for an increase in Samsung Electronics' full-year results. Last year, the semiconductor (DS) division accounted for 82 percent, or 16.4 trillion won, of companywide fourth-quarter operating profit of 20.1 trillion won. In the first quarter, that share is estimated to exceed 90 percent.

A super-boom in memory is lifting overall results, but without support from a foundry turn to profit and improved profitability at the MX division, the business structure's concentration can only deepen. Non-memory areas such as foundry and System LSI, as well as mobile and home appliance businesses, have remained weak since last year.

Park Soon-cheol (박순철), Samsung Electronics' CFO, said during a conference call on full-year 2025 results that, on this year's business strategy, "for foundry, we will turn various opportunities to expand orders obtained through raising process completeness into results," and "System LSI will achieve an overall transformation by securing business competitiveness."