Ahead of potential U.S. tariffs, Samsung reports a modest increase in profits as sales of the Galaxy S surge, but the AI chip has a gloomy outlook.

A surge in smartphone sales ahead of possible U.S. tariffs was the main driver of Samsung Electronics' slight increase in first-quarter operating profit. Even while the company's AI chip area continued to perform poorly, the South Korean tech giant's mobile and network division stood out as the best performer, reaching its biggest profit in four years.

Samsung reported a 1.2% year-over-year operational profit of 6.7 trillion won (about $4.68 billion) for the quarter ended March in its results release on Wednesday. The outcomes matched its initial prediction of 6.6 trillion won.

The main attraction was Samsung's mobile sector, which produced an operating profit of 4.3 trillion won, a 23% rise from the previous year, as a result of strong sales of its most recent Galaxy S series smartphones with AI capabilities. Since 2020, this is the division's greatest quarterly performance.

Industry sources claim that a major contributing element to the mobile boom was an increase in demand as distributors and customers expedited purchases in fear of possible US tariffs. Samsung expanded smartphone production in Vietnam, India, and South Korea to keep ahead of potential disruptions as concerns over trade restrictions on items created in nations like China, Vietnam, and South Korea grew.

The positive news for Samsung did not, however, apply to every business segment. Its semiconductor business reported a mere 1.1 trillion won in earnings, a 42% decrease from the year before. The United States' export restrictions on advanced processors to China, Samsung's biggest market, severely impacted sales of AI chips especially High Bandwidth Memory (HBM) devices. In terms of providing HBM chips to important U.S. customers like Nvidia, the business also behind SK Hynix.