Samsung Electronics Analysts expect the company to report record profits in the fourth quarter on strong demand for server memory chips and higher margins in contract manufacturing. Operating profit for the world’s largest memory chip and smartphone maker reached 15.2 trillion won ($12.7 billion) in the quarter ended December, according to a Refinitiv SmartEstimate of 14 analysts who are consistently more accurate. This will be 68% higher than the 9.05 trillion won a year ago and at least beat the previous Q4 record profit of 15.15 trillion reported in 2017.
Shares of Samsung Electronics have climbed nearly 12% over the past two months in anticipation of higher memory chip prices this year due to new data centers and demand for video, games, conferencing and other streaming services.
“Contrary to previous concerns, the semiconductor industry is likely to see a significant increase in demand from customers in both the memory and non-memory sectors,” said Jeff Kim, analyst at KB Securities.
“As of December, major data center companies in North America such as Amazon, Microsoft and Meta have steadily increased their memory chip orders … and Samsung’s foundry business has won two years of orders through 2023.”
This outlook was supported by stronger-than-expected earnings results in December from its counterpart Micron Technology Inc. and its positive forecast for the next quarter.
Analysts said Samsung’s chip contract manufacturing business, which competes with Taiwan Semiconductor Manufacturing Company (TSMC), also saw operating margins reach between 10% and 20% due to higher deliveries and higher prices compared to the previous quarter. has seen a sharp improvement in profitability, analysts said.
According to the average forecast of five analysts, Samsung’s overall Q4 chip profit is likely to reach 9.7 trillion won, more than double the 3.85 trillion won last year.
The South Korean tech giant will announce preliminary results on Friday.
As for Samsung’s mobile business, which was recently merged with TVs and home appliances into a single device experience (DX) division, analysts said shipments could grow slightly from the previous quarter due to narrowing component shortages. .
The mobile business reported operating profit of about 3 trillion won, about 24%, according to average forecasts from five analysts.
Market participants will be tuning into Samsung’s full results later this month for any update impact on its Xian NAND flash chip manufacturing facilities, with the company saying it will temporarily suspend operations due to strict COVID-19 restrictions in the Chinese city. will adjust.
Data firm Trendforce said last week that Samsung’s Xian plant was building without significant disruption.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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