Samsung Expects its Profits to Jump up by 52%

Technology giant Samsung Electronics has it expects to post a 52% jump in profit for the last three months of 2021, amid the global chip shortage. The world’s biggest memory chip maker estimates that it made 13.8tn won ($11.5 billion) in the period. That would be its highest fourth-quarter operating profit in four years.

The company’s earnings were boosted by strong demand for server memory chips and higher profit margins in its chip contract manufacturing business. “Samsung is well placed to profit from the record-breaking demand for PCs and electronics,” technology analyst Sam Reynolds told the BBC.

Samsung weathers the chip shortage storm, as the tech giant said it expected its profits to jump 52 percent for the last three months of 2021. The world’s biggest memory chip maker estimated that it made a huge profit as mentioned above, thanks to strong demand for server memory chips and higher profit margins.

He also highlighted that the firm had benefited from currency fluctuations: “Korea and won continues to depreciate, making Korea’s exports more attractive on the global market.” However, the estimated profit was lower than the 15.2tn won predicted by many analysts.

Samsung’s spending on such things as employees’ bonuses and marketing for its smartphone business were seen as reasons for missing the market forecast.

In recent months, the global shortage of semiconductors has been causing major disruptions for manufactures, from carmakers that have had to suspend production to Apple warning that iPhone shipments would be delayed.

Investors are also watching the company’s chip manufacturing operation in Xi’an, central China. The city has been in lockdown since 23 December due to a coronavirus outbreak. Samsung said last week that it would “temporarily adjust operations” at its sites in Xi’an but gave no further details of how the measures could impact the production of microchips.

In November, Samsung announced that it had chosen a site close to the US city of Taylor in Texas for its new$17bn computer chip plant. The plant is expected to be operational by the second half of2024. It is the South Korean electronics giant”s biggest-ever US investment. Shares in Samsung Electronics were trading around 1.8% higher in Seoul on Friday.

The outlet reported: “After Samsung saw its profits dip in 2019, things are looking up since the latter half of 2020. The South Korean electronics giant posted Q3 profits of more than $13 billion in 2021. This means profits were up by more than 19 percent compared with the same quarter in the previous year”

 

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