Samsung Electronics Co shares yesterday rose 7.1 percent to a record high in Seoul amid signs of a rebound in the memory chip market and off the back of a surge in earnings.
South Korea’s biggest company posted a 26 percent increase in operating income to 9 trillion won (US$8.3 billion) for the fourth quarter last year in preliminary results. That compares with a 9.52 trillion won average of analyst forecasts.
Sales for the quarter were 61 trillion won. The company did not provide net income or break out divisional performance, which it is to report later this month when it releases final results.
Hours earlier, memorychip maker Micron Technology Inc issued a bullish forecast, predicting that the need for dynamic random access memory would likely exceed supply this quarter.
The tightness of supply in DRAM is already driving up prices, Micron CEO Sanjay Mehrotra said.
His company and Samsung are two of the largest players in a resurgent market that is set to expand through increased usage in the automotive sector and more advanced, resource-intensive applications like artificial intelligence.
“We believe memory pricing recovery will take place not only for DRAM, but also for NAND” this year, Citi Bank analysts wrote in response to Samsung’s results, citing limited supply growth, low inventories and tight capacity.
Galaxy smartphone sales were weaker over the quarter as Apple Inc released its first 5G-compatible iPhones and Chinese rivals launched aggressive campaigns to secure the market share vacated by Huawei Technologies Co’s (華為) sanction-stricken consumer business.
Samsung shipped 41 million 5G devices last year, according to Strategy Analytics estimates, lagging behind Apple’s 52 million and Huawei’s 80 million sold largely at home in China.
Samsung plans to unveil its next flagship series, the Galaxy S21, earlier than its usual annual schedule in an online event on Thursday next week.
Competitors like Xiaomi Corp (小米), Oppo Mobile Telecommunications Corp (歐珀) and Vivo Communication Technology Co (維沃) are aggressively positioning themselves to fill the void expected to be left by Huawei in international markets.
Memory chip prices fell in the fourth quarter owing to a slowdown in server demand, while a stronger Korean won during the period also eroded Samsung’s earnings.
“Samsung’s OP [operating profit] was affected by the currency issue and costs for a new fab,” Samsung Securities analyst M.S. Hwang said. “The strong earnings and outlook of Micron indicates Samsung’s earnings might have not been too bad. The chip market is on track to recover.”
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