You are here: Home » International » News » Companies
Business Standard

Samsung Electronics Q4 profit jumps on server chip demand, foundry margins

By Joyce Lee and Heekyong Yang

Topics
Samsung Electronics | Q4 Results | corporate earnings

Reuters  |  SEOUL 

Samsung

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) - Co Ltd said on Friday its fourth-quarter operating profit likely jumped 52% on-year to its highest for the quarter in four years, helped by solid demand for server memory chips and higher margins in chip contract manufacturing.

The world's largest memory chip and smartphone maker estimated October-December profit at 13.8 trillion won ($11.5 billion), which would be tech giant's highest fourth-quarter operating profit since Q4 2017.

The result missed a Refinitiv SmartEstimate of 15.2 trillion won, which analysts attributed to items such as employees' bonuses, marketing costs for its mobile business, and ramp-up costs for new display panels being included in the quarter.

"It looks like a shock because it came out less than the consensus, but I don't think it's as bad as it looks. It seems they reflected various costs in the fourth quarter," said Park Sung-soon, analyst at Cape Investment & Securities.

"It's unclear as of now if there were any changes in expected chip shipments," Park added.

Revenue likely rose 23% from the same period a year earlier to 76 trillion won, the company said in a short preliminary earnings release, in line with market expectations.

Samsung is due to release detailed earnings on Jan. 27.

Although prices of memory chips dipped during the quarter, increased demand from server clients lifted Samsung's quarter-on-quarter shipments of both DRAM chips, widely used in data centres, and NAND flash memory chips, used for data storage in tech devices, analysts said.

Samsung shares rose 1.3% in morning trade.

Samsung Electronics' shares have climbed about 11% since early November in anticipation of memory chip prices dipping less than expected during the first half of this year then rebounding, boosted by new data centres and demand for videos, games, conferencing and other traffic-heavy services.

Samsung's logic chip business, which includes chip contract manufacturing that competes with Taiwan Semiconductor Manufacturing Co (TSMC), is also expected to post a jump in operating profit to above 1 trillion won in the December quarter due to more deliveries and higher prices, Hanwha Investment & Securities analyst Lee Soon-hak said.

Estimated smartphone shipments by Samsung's mobile business were about 67 million, near 69.3 million in the previous quarter, Counterpoint Research said, helped by easing component shortages, although marketing costs weighed.

The business was recently merged into a single Device Experience (DX) division along with TV and home appliances.

($1 = 1,204.0400 won)

(Reporting by Joyce Lee and Heekyong Yang; Additional reporting by Choonsik Yoo; Editing by Richard Pullin)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, January 07 2022. 08:58 IST
RECOMMENDED FOR YOU
.