Samsung Electronics' DX Division Faces Loss Risk as Company Bets on Humanoids [Strike Risks Hit Companies]

Samsung Electronics Co., Ltd. rode the AI memory supercycle to post a record 57 trillion won in operating profit in the first quarter of this year. Semiconductors, or the Device Solutions Division, accounted for 94% of total profit, making it effectively a semiconductor-only performance. The result was driven by surging prices for general-purpose memory, mass production of HBM4, and stronger demand for high-value-added products. By contrast, the Device eXperience (DX) Division, which oversees home appliances and mobile phones, posted operating profit of just 3 trillion won, raising warning signs. In particular, operating profit from the home appliance and TV businesses came to only about 200 billion won, leaving them barely in the black. If this trend continues, analysts say the DX Division will inevitably post its first annual loss. As a way out of the crisis, Samsung Electronics Co., Ltd. has formally set humanoid robotics and other robot-related businesses at the forefront, saying it will develop Physical AI, including robots, into its next growth engine.
Samsung Electronics Co., Ltd. said on the 30th that sales and operating profit for the first quarter came to 133.87 trillion won and 57.23 trillion won, respectively. That marked increases of 69.16% and 756.1% from a year earlier. It was the company's highest-ever quarterly performance, easily surpassing the fourth quarter of last year.
Semiconductors drove the results. The Device Solutions Division posted sales of 81.7 trillion won and operating profit of 53.7 trillion won, accounting for 94% of total company profit. The semiconductor operating margin, including non-memory chips, reached 66%, and memory-only margins may have exceeded those of SK Hynix at 72%. The gains were fueled by sharp price increases across DRAM, HBM, and NAND flash memory. Samsung Electronics Co., Ltd. began mass production of HBM4, the sixth generation, in February, becoming the first in the industry to do so. In the second quarter, it will also begin supplying samples of HBM4E, the next-generation seventh-generation product, as it moves to strengthen its lead in the HBM market.
By contrast, the DX Division, another key pillar of Samsung Electronics Co., Ltd.'s business, showed mixed results. During the same period, the DX Division posted sales of 52.7 trillion won and operating profit of 3 trillion won. Operating profit fell by about 1.7 trillion won from 4.7 trillion won a year earlier. The MX Division, including the Network Business Division, earned 2.8 trillion won in the first quarter and supported overall performance, but the Digital Appliances Division and Visual Display Business Division generated only about 200 billion won. All DX units are already effectively operating under an emergency management system.
The company is also accelerating efforts to improve its cost structure and reorganize its businesses. Park Soon-cheol, chief financial officer, said during the earnings conference call that the company would "improve its fundamental business competitiveness by strengthening cost competitiveness and streamlining its cost structure."
The semiconductor boom is expected to continue in the second quarter, but the DX Division is likely to remain sluggish due to rising prices for key components. Samsung Electronics Co., Ltd. has turned to new businesses such as robotics as a breakthrough. Its strategy is to first develop manufacturing humanoids based on its production sites, then expand into home and retail applications using the technology it has accumulated. Park said, "Over the past year, we have laid the groundwork to catch up with leading companies in robotics." He added, "We will pursue a two-track strategy of securing our own technology while working with competitive domestic robotics companies, and we will actively consider investment in and acquisitions of those firms if necessary."
soup@fnnews.com Im Subin Reporter