Samsung’s profits surge despite chip shortage

Posted on Apr 7, 2021 at 6:18 amUpdated Apr 7, 2021, 7:06 AM

The semiconductor shortage that is crippling many industries has yet to shake Samsung Electronics, the largest electronics group on the planet. On Wednesday, the South Korean group said it probably generated an operating profit of 9.3 trillion won (7 billion euros) in the first quarter, which represents an increase of 44% over the previous quarter. same period of 2020. Its sales jumped 17% year-on-year to 65 trillion won, or nearly 50 billion euros.

If the group will not release final and detailed financial results until the end of the month, analysts believe that the recent surge in demand for its electronic devices has offset the temporary difficulties of its semiconductor division, which usually generates most of its profits. The reopening of several economies in Asia and the prospects for growth in the United States would have encouraged consumers to resume their purchases of electronic gadgets and flat screens. This division is said to have seen its profits double over one year to reach 1,000 billion won.

The smartphone market, depressed in 2020, has also started to rebound. According to the firm Counterpoint Research, the premium model Galaxy S21, the launch of which Samsung had slightly advanced and lowered the price, would have recorded, in several markets, sales volumes twice as high as those of its predecessor the S20. In the first quarter, the group, which benefits from the virtual disappearance of its Chinese competitor Huawei internationally, would have captured, according to Counterpoint Research, 23% of all smartphone sales on the planet. Its mobile division alone generates, according to calculations by Hi Investment & Securities, 4.150 billion won in profits.

Cold snap on semiconductors

This dynamism contrasts with the cold snap recorded by its semiconductor design and production activity, which reportedly saw its profits fall by 20% to 3.5 trillion won in the first quarter. The world leader in the memory chip market certainly continues to benefit from the rise in prices of DRAMs (Dynamic Random Access Memory). But its sales of “logic chips”, widely used in artificial intelligence solutions, and its foundry activities were destabilized by the closure of a group plant in Texas. The site had to close for nearly a month from mid-February following giant power cuts that followed the passage of a cold snap in the Austin area.

Analysts believe that the revival of production at the end of March at this plant and the growing appetite of all industries for semiconductors should allow Samsung to experience a new surge in sales and profits over the stretch from from April to June.

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