Samsung Electronics Co beat analysts’ profit estimates for the first quarter, but warned of a continued fallout from semiconductor shortages as the global economy recovers from the COVID-19 pandemic.
South Korea’s largest company reported a net profit of 7.1 trillion won (US$6.4 billion) for the three months ended March, beating the 6.7 trillion won average of estimates compiled by Bloomberg. Revenue rose 18 percent for the period.
The Suwon-based conglomerate has been riding a boom in stay-at-home demand for smartphones, PCs, home appliances and cloud services. However, Samsung lost out on chip sales when a factory in Austin, Texas, was knocked offline, exacerbating shortages that have hit companies around the world.
Just before the company’s results, major automakers Ford Motor Co and BMW AG warned of deeper-than-expected hits to production because of the shortages. Even Apple Inc voiced concerns.
Samsung said it would step up production to address the shortages and forecast that chip earnings would increase substantially in the second quarter. The company, which makes memory and logic chips, said its Texas plant has resumed normal operations.
“We expect our profits to improve significantly,” with memory demand from the mobile business likely to be strong even with shortages of other components, Han Jin-man, executive vice president of the semiconductor business, said on a conference call with investors.
After the outage in Texas, first-quarter profit declined at the company’s giant memorychip division, which provides key components for smartphones and servers.
However, Samsung forecast a strong recovery in the business thanks to server and storage demand, and a rebound in economic activity.
Still, the chip crunch shows signs of disrupting Samsung’s own devices arm. The company said that revenue and profit at its mobile division, which produces its marquee Galaxy smartphone line, would slide this quarter, because of component shortages and weak demand for flagship models.
Samsung had previously warned of a serious imbalance in the chips market, while rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) this month said that shortages could extend into next year.
The South Korean firm is evaluating US sites for an advanced US$17 billion plant it hopes would propel its ambitions of competing with TSMC in the pivotal market for customized chips.
Samsung elaborated on its ambitions to expand in the foundry business, a lucrative growth segment that TSMC has dominated.
It plans to expand supply in the second half of the year as its Pyeongtaek Line 2 starts mass production, senior vice president Shawn Han said.
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