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Bloomberg
Samsung Electronics Co’s quarterly profit climbed more than 50% after chip prices stabilised and sales of smartphones surged, reinforcing hopes the memory industry will emerge from its downturn this year.
South Korea’s biggest company posted operating income of $11.5 billion for the three months ended December, missing estimates after it distributed special bonuses to employees. But revenue jumped a better-than-expected 23% to 76 trillion won. The company’s stock climbed as much as 2% in morning trade in Seoul.
Samsung and rivals SK Hynix and Micron Technology are weathering a cyclical downturn, helped by demand from servers and widening array of products from cars to home devices. Micron predicted record revenue for fiscal 2022 thanks to resilient demand from data centers,
networking and auto customers.
Investors are also monitoring Samsung’s operation in the central Chinese city of Xi’an, which has been locked down while the government fights a local outbreak. While it’s unclear how long that situation will persist in the city — also a big Micron production center — analysts say short-term disruptions might dampen supply and lift chip prices. Samsung will provide net income and divisional performance when it reports its full earnings on January 27.
Samsung’s 1.4 trillion won 4Q operating profit miss vs. consensus may be partly due to a one-time incentive payment and also a lockdown in Xi’an, where it has a chip plant. Weakening memory chip prices may also affect its profit in 1Q22. Yet its 23% sales growth in 4Q vs. a year ago may suggest positive sales growth may continue in 1Q, coupled with the upcoming new Galaxy smartphone launch.
Samsung’s foundry business, fabricating semiconductors for the likes of Nvidia Corp., is also making a growing contribution to its bottom line, after the global chip shortage boosted prices for system chips.
Micron reported strong demand for chips used in data centers and industrial machinery last month, and also noted improving supply of other components is helping PC makers build more machines, supporting memory demand. Price drops in the fourth quarter were less dramatic than anticipated, with DRAM down about 5% and NAND dropping 3%, according to Hanwha Investment & Securities.