Samsung Elec sees tech device recovery in 2022

Seoul Jan 27 (BUS): Samsung Electronics Co Ltd on Thursday forecast a recovery in global demand for tech devices in 2022 after reporting the best fourth-quarter earnings in four years, but warned of continuing challenges from supply chain issues and COVID-19. . .

The world’s largest maker of memory chips and smartphones said it expects growth in its chip business this year, as well as in smartphones, although supplies of non-memory chips are likely to remain limited.

For memory chips, the demand for servers is expected to grow due to increased IT investments and new high-core computer processors, while the demand for mobile chips is likely to increase due to an increase in 5G-enabled models.

It said the supply of non-memory chips is expected to remain tight due to 5G penetration, demand for high-performance computing, increased outsourcing of chip design and manufacturers, and continued inventory demand.

Samsung reported a 53% increase in its fourth-quarter operating profit to 13.9 trillion won ($11.6 billion), in line with the company’s expectations, buoyed by rapid sales of memory chips and higher margins in chip contract manufacturing.

Profits in the chip business, its largest division, more than doubled from the same quarter last year to 8.84 trillion won.

However, analysts said earnings were lower than the market had expected due to conservative shipments of memory chips, research and development costs and one-time bonuses at the end of the year.

Samsung said in a statement that it fell short of its initial guidance for memory chip shipments after refraining from pushing aggressively to expand sales, indicating a profit push takes precedence over volume.

Operating profit in Samsung’s mobile business rose 9.9% year-on-year to 2.66 trillion won in the fourth quarter.

In 2022, Samsung predicted that the smartphone market will continue to grow and the wearable market is likely to witness double-digit growth, despite the prolonged uncertainty related to the pandemic and component shortages.

Samsung said on Wednesday that it will unveil its latest flagship smartphone model on February 9.

The release of the new flagship smartphone is expected to lift mobile shipments and profit margins, analysts said, but a slight dip in DRAM chip prices is likely to affect the tech giant’s earnings compared to the previous quarter.

Competitor Intel, the chip maker, expected, on Wednesday, that first-quarter earnings will be lower than Wall Street expectations, with continued restrictions related to ongoing global supply chain issues and strong demand for chips.

Memory chip rival Micron Technology forecast in December that sales and profits would outpace the market in the next quarter as chip shortages eased in 2022.

Net profit rose 64% to 10.8 trillion won. Revenue rose 24% to a record 76.6 trillion won.

Samsung shares fell 0.8% in early trading Thursday, compared to a 1.6% decline in the broader market.

HF