Samsung expects operating profit to surge 50% in the first quarter

Seoul-based tech company is benefiting from a surge in demand during a global shortage

Samsung Electronics expects a big surge in first-quarter profits. EPA
Beta V.1.0 - Powered by automated translation

Samsung Electronics, the world's biggest mobile phone manufacturer, expects operating profit to surge about 50 per cent annually to 14.1 trillion won ($11.6 billion) in the first quarter of 2022 as a result of robust demand for semiconductors, according to preliminary earnings guidance it provided on Thursday.

The Seoul-based company, which is due to report its financial results on April 28, projects sales growth of nearly 18 per cent to 77tn won on an annual basis during the first three months of the year. South Korean disclosure regulations do not allow earnings estimates to be offered as a range, and the values therefore represent a median value.

The projected figures are also higher on a quarterly basis at 1.6 per cent (operating profit) and 0.6 per cent (sales).

The forecast makes it Samsung's best first-quarter performance since 2018, when it posted a profit of 15.64tn won, led by the popularity of the Galaxy S9 series.

Samsung did not provide a divisional breakdown in its Thursday guidance.

Shares of Samsung closed down 0.58 per cent in Seoul on Thursday.

The manufacturer of the Apple iPhone's rival Galaxy series, Samsung is also one of the world's top semiconductor makers and has benefited from a surge in demand for chips during a shortage in the industry.

The semiconductor industry enjoyed a record 2021, with sales rising 26 per cent to $555.9bn, its highest annual total yet, the Semiconductor Industry Association (SIA) reported in February.

Chip sales in the fourth quarter alone grew 28 per cent on an annual basis and about 5 per cent on a quarterly basis to $152.6bn.

A record 1.15 trillion semiconductor units were shipped last year, as chip companies increased production to address high demand during the global shortage, the SIA said.

Samsung posted a 53 per cent surge in operating profit and a 24 per cent rise in revenue on record sales in the fourth quarter of 2021. For the full year, profit jumped 43 per cent to 51.63tn won and revenue rose 18 per cent to a record 279.6tn won, mainly because of its booming semiconductor business. A boost in the sales of OLED panels and its foldable smartphones, the Galaxy Fold 3 and Flip 3, also supported profit.

Samsung continues to take all the actions globally to mitigate the impact [of the chip shortage] ... so that we can really cater to the demand of end users
Osman Albora, senior director of Samsung Gulf's mobile experience division

Samsung has managed to withstand the supply chain shocks that rattled the semiconductor industry and caused a delay in product launches, Osman Albora, senior director of Samsung Gulf's mobile experience division, previously told The National.

“It's felt everywhere, even beyond the tech industry. We have done our role of mitigating that impact, including [with] our supply chain partners, and we have done it well so far,” Mr Albora said.

He did not reveal specific details on what Samsung is doing to deal with the shortage, but said the company “continues to take all the actions globally to mitigate the impact so that we can really cater to the demand of end users, and that demand is significant".

Samsung recently launched its new Galaxy S22 line-up, with the premium Ultra version now featuring a built-in S Pen that continues the legacy of the discontinued Note series.

The new launch is hoped to help the company retain its top spot on global smartphone market share rankings.

Updated: April 07, 2022, 6:43 AM