Samsung's first-quarter profit rises as demand for bitcoin mining chips grows

South Korea's Samsung Electronics posted a year-on-year increase in operating profit in the first quarter of this year. The company attributed the increase to its semiconductor division, which makes chips for mining bitcoin, and said it expected the trend to continue in the second quarter.

Profit growth

South Korea's Samsung Electronics Co. Ltd. recently announced its first-quarter results. Samsung Electronics is the flagship company of the Samsung Group, with assembly plants and sales networks in 80 countries.

Samsung's profits surged in the first quarter of this year, and demand for Bitcoin surged, with the company's comprehensive earnings of 60.56 trillion won (about $56 billion). Its operating profit of 15.64 trillion won (about $14.5 billion) increased by 58% from 9.9 trillion won (about $9.2 billion) in the same period last year. At the same time, its sales increased by about 20% year-on-year.

The Seoul newspaper elaborated that Samsung Electronics’ “semiconductor division…accounted for about three-quarters (73%) of total operating profit, leading the company to record highs.” Samsung explained that the semiconductor division saw increased demand due to sales of its flagship smartphones and demand for virtual currency mining chips.

Samsung's mining chips and profit prospects

Samsung Electronics (Samsung) saw its profits soar in January, as high demand for Bitcoin miners confirmed that the company had begun producing ASIC chips for mining cryptocurrencies such as Bitcoin and Ethereum. Without providing details, a company spokesperson told Techcrunch that "Samsung's foundry business is currently engaged in the manufacturing of crypto chips."

Samsung Electronics offers design services that connect "medium to small companies with qualified ASIC design services and support." In January, Samsung launched its advanced "Foundry Ecosystem" program to ensure deep collaboration between Samsung Foundry, ecosystem partners and customers.

Samsung's profits surge, high demand for Bitcoin

Mining equipment manufacturer Halong Mining previously revealed that its flagship product, the Dragonmint T1 Miner, uses Samsung's 10nm T1558 mining chip, calling it "the first ever 10nm Bitcoin mining chip." Halong said their rig is "the most efficient Bitcoin miner in the world, using AsicBoost technology at 16 to improve power efficiency."

"Earnings growth should continue in 2Q, driven by demand for HPC-based semiconductors and increased supply of new 10nm process products," Samsung Electronics detailed, emphasizing that "in the foundry business, despite a decline in 1Q mobile parts due to seasonal weakness in demand, earnings increased on orders for high-performance computing (HPC) chips. The company went on to share: The company expects to secure second place in the industry with sales exceeding $10 billion."

Mining the Chip Market

Samsung Electronics is competing with several other chipset manufacturers in the manufacturing of ASIC mining chips as demand for Bitcoin surges. The largest of these is Taiwan's TSMC, which supplies mining chips to mining hardware manufacturers such as Bitmain and Canaan. Recently, news.Bitcoin.com reported on TSMC's record sales in March, which was driven by increased demand for the hardware needed for crypto mining.

According to a Trendforce research report released in November last year, TSMC has a 55.9% market share in semiconductor industry revenue, followed by Global Foundries with a market share of 9.4%, UMC with 8.5%, and Samsung with a market share of 7.7%.