Samsung Electronics Co’s quarterly profit climbed more than 50 percent after chip prices stabilized and sales of smartphones surged, reinforcing hopes that the memory industry can emerge from its downturn.
South Korea’s largest company posted operating income of 13.8 trillion won (US$11.46 billion) for the quarter ending last month, missing estimates after it distributed special bonuses to employees.
However, revenue jumped a better-than-expected 23 percent to 76 trillion won. The company’s stock climbed as much as 2 percent in morning trading in Seoul.
Photo: AFP
Samsung and rivals SK Hynix Inc and Micron Technology Inc are weathering a cyclical downturn, helped by demand from servers as well as a widening array of products from vehicles to home devices. Micron last month predicted record revenue for this year thanks to resilient demand from data centers, networking and automobile customers.
Investors are also monitoring Samsung’s operation in the central Chinese city of Xian, a big Micron production center, which has been locked down while the government fights a local COVID-19 outbreak. While it is unclear how long that situation might persist, analysts said that short-term disruptions could dampen supply and lift chip prices. Samsung is to provide net income and divisional performance when it reports its full earnings on Jan. 27.
“Memory prices will rebound in the second quarter if the lockdown in Xian gets prolonged,” Nomura Financial Investment head of Asia technology C.W. Chung said. “Demand from servers is solid, while PC demand is better than the market feared.”
Samsung’s 1.4 trillion won fourth quarter operating estimate miss could be partly due to a one-time incentive payment coupled with the Xian lockdown, Bloomberg analyst Masahiro Wakasugi said, adding that weakening memory chip prices could also affect its profit in the first quarter this year.
Samsung’s foundry business, fabricating semiconductors for the likes of Nvidia Corp, is also making a growing contribution to its bottom line, after the global chip shortage boosted prices for system chips.
Micron reported strong demand for chips used in data centers and industrial machinery last month, and also noted that the improving supply of other components is helping PC makers build more machines, supporting memory demand. Price drops in the fourth quarter were less dramatic than anticipated, with DRAM down about 5 percent and NAND dropping 3 percent, Hanwha Investment & Securities said.
Analysts had projected the industry downturn to persist through the first half of this year, with double-digit drops for both memory classes. Sentiment changed after China imposed its Xian lockdown, affecting production for Samsung and Micron’s local facilities.
Samsung’s Xian plant capacity accounts for about 15 percent of global NAND flash output, Hana Financial Investment said.
Samsung has not completely shut down the fab, but has adjusted operations.
“The NAND flash market may not enter an oversupply situation and is likely to keep the supply-demand balance for six months,” Hana Financial Investment analyst Claire Kim said in a note.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS