Samsung Electronics announced its first quarter 2018 results, with sales of 60.56 trillion won and operating profit of 15.64 trillion won, its highest quarterly performance on a consolidated basis.

In the first quarter, sales increased by approximately 20% year-over-year, driven by the continued strength of the memory market and increased sales of wireless flagship smartphones. Operating profit increased by KRW 5.74 trillion, and the operating profit margin also rose by 6.2 percentage points to 25.8%.

The components business saw continued favorable market conditions, including strong server demand in the memory business, while semiconductor performance increased due to increased sales of system LSI for flagship smartphones and increased demand for cryptocurrency mining chips in the foundry business. However, the display business saw a decline in performance due to a decrease in demand from flexible OLED customers and intensified competition in LCDs.

The set business saw significant performance improvement, driven by the early launch of the Galaxy S9 and robust sales of existing products, including the Galaxy S8. The CE division saw increased sales of premium TV products, but performance declined due to restructuring efforts, including a reduction in the mid- to low-priced TV lineup, and declining profitability in home appliances.

Meanwhile, the strengthening of the Korean won against the dollar resulted in a negative impact of approximately KRW 0.6 trillion compared to the previous quarter, mainly in the parts business. In the second quarter, while memory performance will remain strong, it is expected that performance improvement compared to the first quarter will be difficult due to continued weakness in displays and declining profitability in the wireless business.

In the components business, while semiconductor demand for memory remains robust, system LSI and foundry businesses are likely to see quarter-on-quarter performance declines due to slowing demand for smartphone components. Furthermore, in the display business, OLED will focus on securing profits, while LCD will focus on cost reduction.

The set business is expected to see profitability decline due to slowing flagship sales and increased marketing expenses stemming from stagnant demand for high-priced wireless products. The CE division is expected to see improved performance, driven by increased sales of new models, particularly QLED TVs, and the peak season for air conditioners.

Performance in the second half of this year is expected to grow compared to the first half, driven by the components business, driven by increased OLED panel supply and continued robust DRAM demand. The set business faces performance risks, including stagnant demand for premium products (high-end) and intensifying competition, but the company plans to focus on maintaining profitability by expanding sales of premium products.

Meanwhile, in the mid- to long-term, changes in the IT industry, such as AI, battlefields, and 5G, are expected to create new demand for the components business and expand set business opportunities through connectivity between various devices.

Samsung Electronics plans to continue its differentiated technological leadership and strengthen its business capabilities in areas such as AI and 5G.