South Korea’s two biggest electronics firms yesterday forecast jumps of about 40 percent in their first-quarter operating profit, as the work-from-home trend due to the COVID-19 pandemic fueled global demand for semiconductors and home appliances.
Tech behemoth Samsung Electronics Co said in an earnings estimate that it expected first-quarter operating profit of 9.3 trillion won (US$8.3 billion), up 44.2 percent from a year earlier, largely driven by robust sales of smartphones and the launch of its flagship Galaxy S21 series.
LG Electronics Inc, South Korea’s second-largest appliance firm after Samsung, forecast a 39.2 percent jump in operating profit for the same period, to 1.5 trillion won.
“Both quarterly revenue and operating profit are the highest in the company’s history,” LG said in a statement.
Samsung shares yesterday closed down 0.47 percent, while LG Electronics shares dropped 0.94 percent.
The Samsung figures were ahead of expectations, Moody’s Investors Service vice president Gloria Tsuen said, adding that “tight supplies in the semiconductor segment, especially DRAM,” among others, had helped the firm’s performance.
Analyst forecasts had averaged 8.88 trillion won, according to Bloomberg News.
The worldwide move to working from home has seen consumer demand rise for devices powered by Samsung’s chips, as well as home appliances, such as TVs and washing machines.
Its estimated sales for the period were up 17.5 percent year-on-year to 65 trillion won.
Analysts said that the company has had a particular boost from rolling out its Galaxy S21 series in January, more than a month ahead of the flagship product’s usual annual launch schedule.
“Key to the success of this latest flagship has been its lower US$799 starting price,” tracker Counterpoint Research said in a report. “Lower cost coupled with trade-in offers that essentially make the S21 device free, is helping increase demand for these ‘entry-level’ flagships.”
Hi Investment and Securities Co in Seoul said that Samsung’s first-quarter performance would greatly benefit from its mobile business, backed by solid shipments and cost control.
The tech giant is expected to have produced about 62 million smartphones in the first quarter, with a market share of 18.1 percent, TrendForce Corp (集邦科技) said.
With the estimates, Samsung is expected to reclaim its global smartphone market lead, the tracker said, after losing the spot to Apple Inc during the last quarter of last year.
“For the whole 2021, TrendForce expects Samsung to top the annual ranking” of smartphone brands by production, it added.
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