Seoul: Samsung Electronics Co Ltd said it aims to win a bigger share of the smartphone market with more 5G-capable models this year, and pointed to a potential price rebound for its flagship memory chips as far back as the first half.
The world’s largest memory chip and smartphone maker forecast a recovery in global tech device demand on Thursday after reporting its best fourth-quarter profit in four years, though it slammed supply chain issues and the ongoing COVID-19 pandemic. warned about the challenges.
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Next-generation 5G smartphones will account for more than half of all smartphone sales in the market in 2022, Kim Sung-koo, vice president of mobile business, said at an investor briefing.
“Our strategy at large is to actively capture demand from people seeking to replace their phones with 5G models,” Kim said, adding that the company will pursue more “global mega-hit models.”
Analysts said this would put Samsung, which has around 20% of the global smartphone market, against low-cost Chinese smartphone rivals such as Xiaomi, OPPO and Vivo in markets outside China.
The South Korean tech giant was also cautious on the prospect of price changes for DRAM chips widely used in data centers and tech equipment.
“We expect strong fundamental demand around servers and solid mobile demand from the expansion of 5G models,” said Han Jin-man, executive vice president of the memory chip business.
“Some organizations have predicted that DRAM prices could reverse in the first half. We think this is a likely scenario,” he said, although he added that supply issues, raw material costs and geopolitical risks are unknown. are variables.
The price of DRAM chips fell 9.5% in the fourth quarter from the previous quarter, data from TrendForce showed, and analysts expect further declines in the current quarter. Thoughts are mixed on when they will rebound.
For non-memory chips, Samsung said supply was expected to remain tight due to increasing take-up of 5G-enabled devices, demand for high-performance computing, increased outsourcing from chip design and manufacturing firms, and continued inventory demand.
The company spent 90% of its 2021 annual capital expenditure on the 48.2 trillion won ($40.1 billion) chip business, but declined to provide guidance for 2022.
chip gain
Samsung posted a 53% increase in fourth-quarter operating profit to 13.9 trillion won ($11.6 billion). Profit on its chip business, its largest division, more than doubled from the same quarter a year ago to 8.84 trillion.
Still, analysts said profits were lower than the market expected due to conservative shipments of memory chips, R&D costs and one-year-end bonuses.
Samsung said it fell below its initial guidance for memory chip shipments, indicating a push to prioritize profits over volume, after deciding not to push aggressively to expand sales. .
“Samsung has considered its low inventory of memory chips, a lack of clean room space to expand production into 2022, and the drop in memory chip prices in the last quarter, and has decided not to sell as much,” Park Sung-soon, analyst at Cape Investment & Securities.
“It may continue to tilt towards volume-over-profitability in the first and second quarters depending on market conditions.”
Samsung indicated that it is still exploring M&A opportunities.
“We need to maintain the ability to invest in inorganic growth opportunities,” Samsung Executive Vice President Ben Suh said when asked about investor returns.
Operating profit in Samsung’s mobile business rose nearly 9.9% to $2.66 trillion in the fourth quarter.
On Wednesday, Samsung said it would unveil its latest flagship smartphone model on February 9, which analysts expect to lift mobile shipments. Net profit rose 64% to 10.8 trillion won. Revenue rose 24% to a record 76.6 trillion won. Samsung shares were down 2.5% in afternoon trading on Thursday, while the broader market was down 3.2%.
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