In the first quarter of 2025, Samsung Electronics was faced with a rough semiconductor industry only to then report record revenue of KRW 79.14 trillion ($55.4 billion), an increase of 10% year on year. Despite geopolitical uncertainties and disruptions with trade going forward Samsung is in a strong position from AI-fueled smartphones and next generation memory chips that will help it keep pace in the evolving technology sector. This article discusses the future method of Angel investors in the AI domain and implications for the tech company in South Korea missing out on.

Samsung’s Q1 2025 Financial Performance: AI as a Growth Engine

Key Financial Highlights

• Revenue: KRW 79.14 trillion ($55.4 billion) – all-time quarterly high
• Operating Profit: KRW 6.7 trillion ($4.68 billion) – 1.5% YoY increase
• R&D Spending: KRW 9 trillion (up 16% YoY) – highest-ever quarterly investment

Mobile Business Thrives on Galaxy AI

Samsung’s Mobile Experience (MX) Business was the standout performer, generating:

• KRW 37 trillion in revenue
• KRW 4.3 trillion in operating profit (highest in four years)

The success was driven by strong sales of the Galaxy S25 series, which features advanced AI capabilities under the Galaxy AI umbrella. Features like:

• Real-time language translation
• AI-powered photo and video enhancements
• On-device generative AI tools

This really, in a competitive market, created a big differentiator in the flagships really made by Samsung. 

Semiconductor Division Struggles Amid AI Chip Race

While mobile soared, Samsung’s Device Solutions (DS) Division (semiconductors) faced challenges:

• Revenue: KRW 25.1 trillion
• Operating Profit: KRW 1.1 trillion (42% decline YoY)

The decline was attributed to:

1. Lower High-Bandwidth Memory (HBM) sales due to U.S. export controls on AI chips.
2. Delayed demand as customers await HBM3E 12H products (expected in late 2025).
3. Price erosion in legacy memory chips.

Competitive Pressure:

• SK Hynix overtook Samsung in DRAM market share (36% vs. 34%), per Counterpoint Research.
• The operating profit of SK Hynix shot up 158 percent, driven by strong sales of HBM for AI servers.

Geopolitical Risks and Trade Uncertainties

Samsung did not release its usual business outlook for Q2, referring to fabrics of arguments in global trade and its murky policy. Key concerns include:

1. U.S. Tariffs and Export Controls

• Former President Donald Trump’s “reciprocal tariffs” (suspended until July 2025) could impact Samsung’s production in Vietnam and South Korea.
• The U.S. is investigating whether to impose tariffs on semiconductors, smartphones, and tablets.

2. Supply Chain Diversification

Samsung is exploring relocating TV and home appliance production to mitigate risks.

3. China’s Semiconductor Self-Sufficiency Push

• China’s advancements in mature-node chips threaten Samsung’s market share.
• Export restrictions on advanced AI chips to China remain a hurdle.

Samsung’s AI Roadmap: Smartphones, Memory, and Foundry

1. Expanding AI Smartphones

Samsung plans to:

• For the whole of the AI phone mid-range family Galaxy A, bring in a bit of Extraordinary Intelligence.
• It spells for the release of GS25 Edge in Q2, 2025, with extra enhancement in AI.
• Upgrade foldables (Galaxy Z Fold 7 & Flip 7) with new AI experiences.

Why It Matters:

• On-device AI reduces cloud dependency, improving privacy and speed.
• AI smartphones could drive 40% of premium sales by 2026 (Counterpoint).

2. Regaining Leadership in AI Memory Chips

Samsung aims to:

• Mass-produced HBM3E 12H (12-layer stacked HBM) to compete with SK Hynix.
• Boost LPDDR5x production (10.7Gbps) for AI PCs and smartphones.

Market Outlook:

• HBM demand will grow 60% annually through 2027 (TrendForce).
• Samsung must catch up in packaging tech (SK Hynix leads in TSV integration).

3. Foundry Business: Betting on 2nm GAA

• 2nm Gate-All-Around (GAA) process remains on track for 2025.
• Competing with TSMC and Intel for AI chip contracts (Nvidia, AMD, Apple).

Challenges & Future Outlook

1. Can Samsung Regain Semiconductor Dominance?

• SK Hynix and Micron lead in HBM, while Samsung lags in yield rates.
• Success hinges on HBM3E 12H adoption by Nvidia, AMD, and cloud providers.

2. Will AI Smartphones Sustain Growth?

• Apple’s iOS 19 AI features could challenge Galaxy AI.
• Google’s Pixel 10 with Gemini Nano poses competition.

3. Geopolitical Risks & Supply Chain Resilience

• U.S.-China tech war may disrupt chip exports.
• Samsung needs more U.S./EU fabs to reduce Asia dependency.

Conclusion: Samsung at a Crossroads

High Q1 revenues for Samsung have attested that their AI smartphone strategy indeed works, but the weaknesses-disclosing semiconductor struggles remain. Over the next 12 months, the following will be critical:

• HBM3E 12H ramps up.
• 2nm GAA chips enter production.
• AI smartphones expand beyond flagships.

If Samsung executes well, it can reclaim its AI semiconductor leadership. If not, rivals like SK Hynix and TSMC may solidify their dominance in the AI hardware race.

Key Takeaways

✅ Galaxy AI drives smartphone profits, with KRW 4.3 trillion operating income in MX division.
⚠️ Semiconductor division struggles (42% profit drop) due to HBM competition and export controls.
🌍 Geopolitical risks (tariffs, China sanctions) could disrupt supply chains.
🚀 Future growth depends on HBM3E, 2nm chips, and AI-powered devices.

Samsung’s AI strategy is delivering now, but the bigger battle for AI chip supremacy is just beginning.