Samsung Electronics profit jumps 51% on strong server chip demand and S22 Ultra sales
This photo taken on April 20 shows an exhibit of Samsung Electronics at the World IT Show held in Seoul. (Yonhap)
South Korean consumer electronics giant Samsung Electronics has posted record quarterly revenue for three consecutive quarters and reported a 51% increase in first-quarter operating profit, according to its earnings forecast on Thursday.
Samsung Electronics said solid demand for chips for high-end servers and applications, along with strong sales of the Galaxy S22 Ultra, which began replacing its Note lineup this year, overshadowed macroeconomic uncertainties and security concerns. supply chain due to the Russian invasion of Ukraine and the pandemic. lockdowns in China.
Samsung’s consolidated first-quarter revenue was 77.78 trillion won ($61.48 billion), up 19% from a year earlier, while profit from operating rose 51% to 14.12 trillion won. Both numbers were close to meeting analysts’ expectations, according to domestic market news firm FnGuide.
Quarterly revenue for Samsung’s semiconductor chip division hit a record high of 26.87 trillion won, up 39 percent year on year. That of the division overseeing mobile gadgets and home appliances came in at 48.07 trillion won, the highest since 2013.
In particular, memory chip sales rose on the back of a slower than expected decline in memory chip prices, supported by strong demand for servers in data centers. This comes as more companies rush to build new infrastructure suitable for their AI applications around the world, Samsung said. However, a one-time special incentive and slight seasonality effects in some memory chip applications caused earnings to decline slightly, he added.
“Companies are also increasing their investments in IT infrastructure. At the same time, many cloud service providers are increasing their investments as they move into new business areas such as AI and machine learning,” said Han Jin-man, Vice-Chancellor. Executive Chairman of the Semiconductor Business in charge of memory chip operations. call for results Thursday.
Server demand will continue to remain robust despite market uncertainties, he added, as an oversupply of memory is unlikely due to operational constraints related to the increased supply of server chips, such as as the need to introduce advanced memory chips and processors that work with them.
“Given that strong server demand is supported by fundamental demand drivers, I think there’s not much scope for being excessive in memory inventory accumulation,” Han said.
As for its mobile business, strong sales can be attributed to the debut of its Note successor, the S22 Ultra, and the launch of mid-range 5G phones. There have also been strong sales of wearables and tablets, which make up the rest of the Galaxy ecosystem and enable a multi-device experience for the user. Samsung said it was looking to leverage its global supply chain management capability to overcome uncertainties, primarily through long-term contracts with component suppliers, to achieve two-way growth. division digits.
As a result, supply chain constraints will begin to resolve from the second quarter, said Kim Sung-koo, vice president in charge of Samsung’s mobile business.
Samsung Electronics is the largest memory chip maker by sales and the world’s second-largest chip contract maker after Taiwan-based TSMC. Additionally, Samsung is the largest mobile phone maker by shipments but ranks second by sales, according to Counterpoint Research.
Meanwhile, Samsung said favorable exchange rates led to a windfall of 300 billion won in operating profit from the previous quarter, with the strength of the US dollar against the Korean won outweighing the weakness of some emerging currencies.
For the first quarter, Samsung Electronics set aside 2.45 trillion won to pay dividends to shareholders, or 360 won each for common stock and preferred stock.
The company’s common stock price fell 0.3% on the Korea Stock Exchange on Thursday, pushing its market capitalization to nearly 390 trillion won. Samsung is the largest listed company in Korea.
By Son Ji-hyoung ([email protected])