Samsung Electronics Co’s operating profit fell by more than one-third in the fourth quarter of last year, the world’s biggest manufacturer of smartphones and memory chips estimated yesterday.
Samsung was hit by a series of difficulties last year, with chip stockpiles bloating and prices falling, in contrast to the booming market of previous years.
The premium smartphone market has also grown fiercely competitive, with buyers waiting longer before upgrading to new models.
Photo: AFP
However, the figures beat expectations, analysts said, with chip demand starting to improve and strong smartphone sales.
The forecast represented a relative improvement — in each of the first three quarters of last year, net profit fell by more than half year-on-year.
In an earnings guidance statement, Samsung Electronics projected operating profit in the October-to-December period at 7.1 trillion won (US$6.1 billion), down 34.2 percent year-on-year.
Sales were forecast to be flat at 59 trillion won, it added.
For the whole of last year, it predicted operating profit of 27.7 trillion won, down 52.9 percent, on sales down 5.8 percent to 229.5 trillion won.
Samsung Electronics shares reached an intraday one-year high in Seoul and closed up 1.8 percent, while the KOSPI was down 1.1 percent following an Iranian missile attack on US forces in Iraq.
“Sales in memory chips were strongest along with good numbers in its IT and mobile division,” Hana Financial Investment Co analyst Lee Joon-min said.
Analysts expect Samsung to perform better this year on the back of a recovery in chip demand and limited supply, along with new 5G smartphone models and other innovations.
Reduced chip production at one of Japanese rival Kioxia Corp’s plants has seen average NAND flash selling prices “start to rebound,” Avril Wu (吳雅婷), an analyst at the Taipei-based market tracker TrendForce Corp (集邦科技) told reporters.
“As for DRAM, we expect prices to increase each quarter in 2020,” she said, adding: “The recovery of the DRAM and NAND market is mostly driven by the constriction of supply, but an increase in demand also contributes to this as well.”
Samsung is also pinning its hopes on increasing availability of 5G telecom services driving sales of its handsets — it is a world leader in the technology.
Last week, it said it had shipped more than 6.7 million Galaxy 5G smartphone devices globally last year, claiming it had more than half the world’s 5G smartphone market as of November.
“For Samsung, 2020 will be the year of Galaxy 5G,” said TM Roh, head of the company’s mobile communication division.
Samsung withholds net profit and sector-by-sector business performance until it releases its final earnings report, expected later this month.
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