Samsung Rides Chip, Display Sales to Post Q4 Operating Profit

Samsung shares jumped on Friday after it mentioned its fourth quarter working revenue probably rose 26 p.c as coronavirus pandemic pushed distant working and TV-watching fuelled gross sales of chips and show panels.

Samsung Electronics shares rose as a lot as 8.6 p.c in afternoon commerce to a document excessive, in comparison with a 3.9 p.c rise within the wider market, because of an earlier-than-expected rebound in reminiscence chip costs, analysts mentioned.

DRAM chip costs seem like turning round now, fairly than later within the 12 months as we anticipated,” mentioned Track Myung-sup, analyst at HI Funding & Securities.

Samsung’s shares have risen about 67 p.c since September, boosted by a world scarcity of chips that has compelled corporations to scramble to safe manufacturing capability from contract chip producers, or foundries.

The KRW 9 trillion (roughly Rs. 60,400 crores) estimate offered by the South Korean tech large for revenue within the December quarter was in step with a KRW 9.1 trillion (roughly Rs. 61,000 crores) analyst forecast by Refinitiv SmartEstimate regardless of weaker smartphone gross sales, advertising prices and a robust gained versus US the greenback.

That analyst forecast was trimmed again from KRW 9.5 trillion (roughly Rs. 63,750 crores) earlier within the week.

Samsung, the world’s largest reminiscence chip provider and maker of smartphones, additionally mentioned income probably rose 1.9 p.c to KRW 61 trillion (roughly Rs. 4,09,350 crores).

The corporate supplies solely estimates of quarterly income and working revenue in its preliminary earnings launch. Full earnings are due later this month.

“Work-from-home will grow to be entrenched,” mentioned Park Sung-soon, analyst at Cape Funding & Securities. “Samsung’s provide feedback, and investments in non-memory chips, will probably be points to be careful for when full outcomes are introduced.”

Park mentioned analysts could be intently looking forward to an replace on an earthquake in Taiwan final month that briefly stopped reminiscence chip manufacturing at rival DRAM makers. Whereas demand often rises in response to a provide disruption, researcher TrendForce mentioned the earthquake didn’t appear to have brought on any tangible capability losses.

Analysts count on Samsung to report a soar in reminiscence chip shipments within the December quarter, in contrast with the prior quarter, offsetting decrease costs.

These costs will probably rebound within the present quarter, analysts mentioned, as information centre clients return to purchasing chips, in addition to demand from 5G smartphones, notebooks, graphics, and automotive.

South Korea expects semiconductor exports to rise greater than 10 p.c in 2021, because the pandemic encourages firms so as to add bandwidth for distant work and customers to purchase units.

US reminiscence chip peer Micron on Thursday forecast second-quarter income above Wall Avenue estimates.

Smartphone stoop

On the flip facet, Samsung probably recorded an estimated 17.5 p.c drop in smartphone shipments within the December quarter in comparison with the earlier quarter, Counterpoint Analysis mentioned, because of a excessive base from brisk gross sales within the September quarter and competitors from Apple’s new iPhone 12.

Samsung is predicted to unveil its newest flagship smartphone subsequent week. That may be sooner than in previous years, a method Counterpoint mentioned was probably aimed toward filling the vacuum left by Huawei shedding market share after US authorities rules restricted provides.

A powerful gained towards the US greenback additionally dented income. Samsung makes the majority of its income in {dollars} however stories in gained.

© Thomson Reuters 2020

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