Samsung Electronics Co missed analyst estimates for the past quarter, and warned that profitability would likely decline this quarter, citing weakness in its memorychip business and challenges with currency fluctuations.
South Korea’s biggest company reported net income of 6.45 trillion won (US$5.8 billion) last quarter, missing the 7.3 trillion won average of estimates compiled by Bloomberg.
Samsung, the world’s largest maker of memory chips and displays, struck a cautious tone that stood in contrast to that of many technology companies benefiting during COVID-19 lockdowns.
Photo: AFP
“In the first quarter, we expect overall profitability to decline due to relative weakness in the memory and display businesses,” Samsung executive vice president of investor relations Ben Suh said during a call with investors.
In the memory business, Samsung’s most important profit engine, “results are likely to weaken due to currency effects and continued costs associated with new fab ramp-up.”
Operating profit for the semiconductor unit was 3.85 trillion won in the fourth quarter, short of the 4.62 trillion estimate from analysts. The company said it expects a recovery in the business in the first half of this year.
In the smartphone business, Samsung struggled in last month’s Christmas holiday period, as Apple introduced its first 5G-capable iPhones and Chinese rivals put up fierce competition.
Investors had hoped that Samsung could increase its dividend payout substantially, in part because the founding Lee family faces an enormous inheritance tax bill.
Instead, the company said it would continue to return 50 percent of free cash flow to shareholders from this year through 2023, although its annual dividend payout would increase slightly to 9.8 trillion won.
The company signaled that it would continue to press ahead with critical deals and investments. Samsung would use its capital to expand the capacity of its foundry business, which manufactures chips for clients like Nvidia Corp, to meet demand and overcome current supply shortages.
It would also invest in facility expansions and “meaningful” acquisitions, the company said.
“For the last few years, we have been evaluating possible M&A [merger-and-acquisition] opportunities very carefully and have made significant progress in terms of preparation,” Samsung chief financial officer Choi Yoon-ho said during the earnings call. “Although it is difficult to pinpoint a specific timing due to uncertainties in the internal and external business environment ... we are optimistic of carrying out meaningful M&A activities during this term.”
Samsung has a fab in Austin, Texas, which is capable of operating a 14-nanometer process.
With rising growth expectations in the foundry market, Samsung is considering building a cutting-edge logic chipmaking plant in the region that would be capable of fabricating chips on a process as advanced as 3 nanometer, Bloomberg News reported earlier.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS