Samsung Electronics Co’s operating profit rose more than 25 percent thanks to rising prices for semiconductors and surprisingly strong demand for its pricey foldable smartphones.
South Korea’s largest company reported operating profit of 15.8 trillion won (US$13.2 billion) in the three months ended last month, in line with the 15.75 trillion won average of analyst estimates. Sales were 73 trillion won, compared with estimates of 73.5 trillion, according to preliminary results released yesterday.
The world’s largest maker of memory chips and smartphones has benefited from strong demand as the global economy recovers from the COVID-19 pandemic. Chronic shortages have pushed up prices of memory chips, used in everything from mobile phones to smart cars, and the data centers powering cloud computing and services. Samsung is also expanding its foundry business, churning out custom chips for customers like Nvidia Corp.
Photo: AP
In the mobile business, Samsung is ramping up production to meet strong demand for its foldable phones. The Z series, launched in August, can cost more than US$1,800 but also includes the first sub-US$1,000 foldable in the Galaxy Z Flip 3, which has expanded the category’s customer base.
Samsung sold one million new foldable phones at home in Korea at the third-fastest sales pace after its Note 10 and Galaxy S8, the company said.
While Samsung is better known outside of South Korea for its smartphones, its profits are largely driven by its memory-chip business. Semiconductors account for the largest slice of its income.
Memory chip prices are expected to fall in the current quarter because of stockpiling by customers, signaling a potential cyclical downturn. Micron Technology Inc, one of Samsung’s primary rivals, gave a conservative outlook because PC demand is slowing.
“DRAM operating profit could climb due to sequential bit growth of 3-5 percent and also price rises in 3Q. NAND may also drive strong profit growth in 3Q due to a 10-15 percent sequential rise in bit shipments with a price increase of 5-9 percent. The chip shortage may help operating profit for the foundry business climb in 3Q. New foldable smartphones may fuel sales growth in the mobile division,” Bloomberg Intelligence said.
“While we expect DRAM market weakness in 4Q in 2021 and 1Q in 2022 on weak PC demand and relatively high inventory level at clients, we believe memory makers are more likely to accumulate inventory and revise down their 2022 capex to support memory pricing, rather than maximizing production,” Citigroup analyst Peter Lee said. “In any case, we expect the DRAM market to recover in 2022 due to supply constraint, given limited available clean room space and the launch of DDR5 products.”
Samsung’s foundry business has benefited from the transition to 5G wireless technology and high-performance computing, which have increased the global need for more sophisticated chips.
Robust sales of the Z foldable phones are likely to continue into the first quarter, and Chinese smartphone brands are increasing their purchases of foldable displays from Samsung, said Greg Roh, a senior vice president at HMC Securities.
GROWING OWINGS: While Luxembourg and China swapped the top three spots, the US continued to be the largest exposure for Taiwan for the 41st consecutive quarter The US remained the largest debtor nation to Taiwan’s banking sector for the 41st consecutive quarter at the end of September, after local banks’ exposure to the US market rose more than 2 percent from three months earlier, the central bank said. Exposure to the US increased to US$198.896 billion, up US$4.026 billion, or 2.07 percent, from US$194.87 billion in the previous quarter, data released by the central bank showed on Friday. Of the increase, about US$1.4 billion came from banks’ investments in securitized products and interbank loans in the US, while another US$2.6 billion stemmed from trust assets, including mutual funds,
Micron Memory Taiwan Co (台灣美光), a subsidiary of US memorychip maker Micron Technology Inc, has been granted a NT$4.7 billion (US$149.5 million) subsidy under the Ministry of Economic Affairs A+ Corporate Innovation and R&D Enhancement program, the ministry said yesterday. The US memorychip maker’s program aims to back the development of high-performance and high-bandwidth memory chips with a total budget of NT$11.75 billion, the ministry said. Aside from the government funding, Micron is to inject the remaining investment of NT$7.06 billion as the company applied to participate the government’s Global Innovation Partnership Program to deepen technology cooperation, a ministry official told the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s leading advanced chipmaker, officially began volume production of its 2-nanometer chips in the fourth quarter of this year, according to a recent update on the company’s Web site. The low-key announcement confirms that TSMC, the go-to chipmaker for artificial intelligence (AI) hardware providers Nvidia Corp and iPhone maker Apple Inc, met its original roadmap for the next-generation technology. Production is currently centered at Fab 22 in Kaohsiung, utilizing the company’s first-generation nanosheet transistor technology. The new architecture achieves “full-node strides in performance and power consumption,” TSMC said. The company described the 2nm process as
JOINT EFFORTS: MediaTek would partner with Denso to develop custom chips to support the car-part specialist company’s driver-assist systems in an expanding market MediaTek Inc (聯發科), the world’s largest mobile phone chip designer, yesterday said it is working closely with Japan’s Denso Corp to build a custom automotive system-on-chip (SoC) solution tailored for advanced driver-assistance systems and cockpit systems, adding another customer to its new application-specific IC (ASIC) business. This effort merges Denso’s automotive-grade safety expertise and deep vehicle integration with MediaTek’s technologies cultivated through the development of Media- Tek’s Dimensity AX, leveraging efficient, high-performance SoCs and artificial intelligence (AI) capabilities to offer a scalable, production-ready platform for next-generation driver assistance, the company said in a statement yesterday. “Through this collaboration, we are bringing two
RSS