Samsung experiences highest revenue in 3 years on world chip scarcity

Samsung Electronics has estimated that its income jumped to the very best stage in three years within the third quarter on file gross sales and elevated semiconductor costs.

However the world’s greatest producer of reminiscence chips, smartphones and digital shows tempered its upbeat steering with a warning that laptop chips might be getting into a downcycle.

Samsung stated working revenue hit Won15.8tn ($13.2bn) between July and September, up 28 per cent from Won12.3tn a 12 months earlier. It was barely decrease than the Won16.1tn estimated by analysts polled by Refinitiv.

Gross sales rose 9 per cent to a excessive of Won73tn as surging demand for client electronics throughout coronavirus lockdowns boosted chip orders.

However Samsung’s earnings are anticipated to fall within the present quarter, with chip costs coming underneath strain because the home-working boom fades and economies reopen. US rival Micron Know-how warned final month that its near-term reminiscence chip shipments would slip due to elements shortfalls.

“As we enter the ‘with Covid’ period, with extra folks returning to normality, demand for electronics comparable to laptop computer computer systems and TVs is weakening,” stated Kim Younger-woo, an analyst at SK Securities. “Rising inflation may even drive up their manufacturing prices, which is able to subsequently damp demand.”

The global shortage of non-memory chips additionally boosted income at Samsung’s foundry enterprise, which is planning to take a position $17bn in a brand new US plant for contract chip manufacturing.

Samsung shares have fallen greater than 20 per cent from a January peak on issues that the semiconductor trade might be getting into a prolonged downcycle. Its shares gained 0.84 per cent on Friday morning.

The corporate was buying and selling at lower than 11 instances ahead earnings, near its five-year common, however less expensive than smartphone rival Apple’s 25 instances.

Detailed outcomes can be introduced later this month.

“Samsung’s share worth is underneath strain on account of worries that the semiconductor cycle will peak out and the corporate’s pricing energy might be undermined by rising inventories of shoppers,” wrote Kim Dong-won, an analyst at KB Securities, in a current report.

However analysts projected that Dram reminiscence chip costs would recuperate after a modest demand dip, as chipmakers’ provides and inventories remained tight.

Samsung is a dominant producer of Drams, which allow short-term storage for graphic, cellular and server chips, and Nand chips. Dram chip costs rose 7.9 per cent from the earlier three months. whereas these of Nand flash chips, which permit for information and information to be saved with out energy, gained 5.5 per cent, in response to information from analysis supplier Trendforce.

The launch of Intel’s new central processing unit within the second quarter of 2022 can be anticipated to drive demand.

“Dram costs will stay underneath strain from December via March on weak demand,” stated Kim at SK Securities, including that “the worth decline can be slower earlier than a turnround within the third quarter, though Nand chip costs are prone to stay weak all through subsequent 12 months”.

Samsung offered about 2m models of its new foldable smartphone, which it launched in August after slashing costs in a bid to spice up gross sales. However cellular earnings had been dented by advertising and marketing prices, whereas the chip scarcity hampered manufacturing.

The corporate’s smartphone shipments fell to 69m within the third quarter from 80m a 12 months earlier, in response to Claire Kim at Hana Monetary Funding, which had boosted Samsung forward of Apple to the highest of the handset leaderboard.