Samsung sees solid chip demand and stronger phone sales in first-quarter

Platform News: Samsung Electronics logo

Samsung Electronics forecast solid demand for its chips in the present quarter and stronger cellular sales after bringing forward the launch of its flagship smartphone to grab market share.

The world’s top maker of memory chips warned, however, a stronger currency and prices related to new chip manufacturing would lead to a weaker profit result, after posting a 26% jump in operating profit in the fourth quarter.

Samsung shares fell 1.5% in early trade, despite declaring a one-time specific cash dividend of 10.7 trillion won ($9.60 billion) along with its year-end dividend, on growing jitters about a equity market bubble.

Investors have pushed up the stock around 60% since September, partially on a bullish outlook for its chip contract manufacturing company, as a result of chip shortages and limited manufacturing capability.

“Looking ahead, Samsung Electronics expects overall profit to weaken in the first quarter of 2021,” the firm said in a statement.

Related Article:
Huawei laments Trump administrations plans to curb its global chip supply

“For 2021, (Samsung) expects a recovery in overall global demand but uncertainties persist over the possibility of recurring COVID-19 waves,” it added.

The leap in operating profit in the October-December quarter came as powerful memory chip shipments and screen profits offset a strong won, the cost of a brand new chip manufacturing line, weaker memory chip prices, and a quarter-on-quarter fall in smartphone prices.

The South Korean money rose about 7 percent against the dollar in the three months to December. A stronger won erodes the value of international earnings for South Korean businesses.

DRAM RECOVERY

While similar money conditions are anticipated in the short-term, the market for DRAM chips that go into devices is expected to recover during the first half of 2021 from server and mobile customers’ demand, Samsung said.

“DRAM prices are expected to grow much higher than expected in Q1, as server clients run out of inventory they stockpiled when COVID-19 first broke out in first half of last year, and start buying ,” explained Park Sung-soon, an analyst at Cape Investment & Securities.

Related Article:
Huawei to roll out itds Harmony OS to more products next year

Samsung’s capital expenditure in 2020 attained 38.5 billion won, for example 32.9 trillion won on semiconductors. Investment in chip contract manufacturing jumped as the company expanded a production facility. Memory chips saw substantial spending growth for capacity expansion and advanced procedure, it stated.

Samsung’s fourth-quarter operating profit rose to 9.05 trillion won ($8.17 billion), from 7.2 billion won a year before, in line with the organization’s estimate earlier that month.

Revenue in the world’s top maker of memory chips and smartphones rose 3 percent to 61.6 trillion won. Net profit rose 26% to 6.6 billion won.

Officials stated Samsung’s display unit reported higher-than-expected profits in the December quarter as providing panels for Apple’s brand new iPhone kept its OLED production roughly 100% of capacity during the quarter.

Samsung declared a three-year shareholder return coverage that will increase periodic dividend to an yearly total of 9.8 trillion obtained for 2021-2023.

Related Article:
Rio seeks to roll out a mobile app for beachgoers

It’ll continue to pay out 50% of the free cash flow (FCF) generated in the period of time, as from the past three years.

The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Joyce Lee and Heekyong Yang. Editing by Richard Pullin.

Stay on top of the latest developments across the platform economy and gain access to our problem-solving tools, proprietary databases and content sets by becoming a member of our community. For a limited time, premium subscription plans start from just $7 per month.

Share This Post