Samsung Electronics Rides Pandemic-Driven Chip Demand to Report Quarterly Profit Spikes


Samsung Electronics, the world’s greatest smartphone and reminiscence chip maker reported fourth-quarter internet earnings up by greater than 1 / 4 year-on-year Thursday, with coronavirus-driven working from house boosting demand for units powered by its chips.

However the figures had been under market expectations in accordance with Bloomberg Information, and the corporate warned of persisting uncertainties over the pandemic, and decrease earnings in Q1 2021 as a result of falling costs.

Samsung Electronics is the flagship subsidiary of the large Samsung group, by far the most important of the family-controlled empires often called chaebols that dominate enterprise in South Korea, the world’s 12th-largest financial system.

The conglomerate is essential to the South’s financial well being — its total turnover is equal to a fifth of the nationwide gross home product.

Samsung Electronics mentioned earnings rose 26.Four % in October to December on a 12 months earlier to KRW 6.61 trillion (roughly Rs. 43,300 crores), led by show and reminiscence chip companies.

“Though challenges from the COVID-19 pandemic proceed, company-wide efforts to make sure a secure provide of services and products globally helped Samsung’s fourth-quarter outcomes,” the agency mentioned in an earnings report.

The coronavirus has wreaked havoc with the world financial system, with lockdowns and journey bans imposed across the globe for a lot of months.

However the pandemic – which has killed greater than two million individuals worldwide – has additionally seen many tech corporations growth, together with Samsung.

“It is true that Samsung’s gross sales elevated year-on-year because of the unfold of the so-called ‘new regular’, which led to a surge in demand for electronics,” mentioned Jene Park, an analyst at market observer Counterpoint Analysis.

Working revenue rose 26.Four % to KRW 9.05 trillion (roughly Rs. 59,300 crores), whereas gross sales had been additionally up 2.eight % at KRW 61.55 trillion (roughly Rs. 4,03,170 crores).

Even so, Samsung famous that earnings fell from the earlier quarter as a result of weaker reminiscence costs and sluggish client product gross sales, in addition to increased advertising and marketing prices and appreciation by the Korean gained.

The development was more likely to proceed, it mentioned, with profitability within the reminiscence enterprise affected by gained power “and prices related to new manufacturing strains, regardless of stable demand from cellular merchandise and knowledge centres”.

It anticipated a restoration in total international demand in 2021, however warned that “uncertainties persist over the potential of recurring COVID-19 waves”.

For the complete 12 months, internet revenue jumped 21.5 % to KRW 26.41 trillion (roughly Rs. 1,73,000 crores), on gross sales of KRW 236.81 trillion (roughly Rs. 15,51,630 crores), up 2.eight %.

Samsung Electronics shares had been down 1.64 % in early commerce Thursday.

Jailed boss

The worldwide chip-manufacturing trade is anticipated to see file income this 12 months, with the stay-at-home financial system persisting due to the pandemic, in accordance with Taipei-based market tracker TrendForce.

Samsung has aggressively stepped up its investments in semiconductors in recent times.

As its newest funding, the tech big is contemplating spending as a lot as $17 billion (roughly Rs. 1,24,260 crores) to construct a chip plant in Arizona, Texas or New York, the Wall Avenue Journal reported final week.

If confirmed, it might be the largest funding by Samsung within the absence of its de facto chief Lee Jae-yong.

Lee was sentenced final week to 2 and a half years in jail in a retrial over a sprawling corruption scandal that introduced down former president Park Geun-hye.

That ruling solid additional uncertainty over Samsung after the burial of late chairman Lee Kun-hee, who turned Samsung Electronics into a world powerhouse, in October.

Consultants say a management vacuum might hamper the agency’s decision-making on future large-scale investments, which have been key to its rise.

Kim Dae-jong, a enterprise professor at Sejong College, mentioned: “Samsung is a vital firm for South Korea and the imprisonment of its chief is disadvantageous.”

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