Samsung’s profits jump amid computer chip shortage
Samsung Electronics (Samsung) expects a 50 per cent jump in quarterly operating profits to $14.1tn (£8.9bn), powered by the global shortage of computer chips which has raised prices and boosted demand.
This would be its highest first-quarter profit since 2018, which was also supported by brisk smartphone sales over the three month period.
The results were above market expectations – with Refinitiv forecasting $13.3tn over the quarter.
Revenue has likely risen 18 per cent from the same period a year earlier to a record $77tn – also above market expectations.
“The guidance beat market expectations, probably due to memory chip shipments and prices being better than expected,” said Park Sung-soon, analyst at Cape Investment and Securities told Reuters.
While memory chip prices dipped in the first quarter, analysts expected solid demand from data centre clients alongside cautious investment spending by chipmakers and limited capacity expansion buoyed Samsung’s chip earnings, which make up about half of its total profits.
The chipmaker also likely benefited from a disruption at a rival NAND Flash chip plant owned by Japan’s Kioxia and American firm Western Digital due to contamination of raw materials.
“After the contamination issue at Kioxia, I think there were rush orders for NAND Flash chips made to Samsung for products that were meant to be secured from Kioxia,” Park added.
The disruption at the Kioxia plant in early February is expected to drive up NAND Flash prices by 5-10 per cent, offsetting the effects of modestly high inventories maintained by buyers, data provider TrendForce said.
Meanwhile, Samsung shipped an estimated 72m smartphones in the first quarter, according to Counterpoint Research.
This is down some 11 per cent from a year earlier, mostly due to a later than usual release of its flashy newest smartphone – the Galaxy S22.