This photo taken June 7, 2020, shows a corporate flag of Samsung Group hoisted at an office building of Samsung Electronics Co. in Seoul. (Yonhap)
SEOUL, Jan. 27 (Korea Bizwire) — Samsung Electronics Co. on Thursday reported strong fourth-quarter earnings on robust chip business and brisk sales of consumer electronics.
Net profit rose 64.04 percent from a year earlier to 10.8 trillion won (US$9 billion) in the October-December period, the world’s largest memory chip and smartphone vendor said in a regulatory filing.
Operating profit jumped 53.3 percent to 13.8 trillion won, the highest fourth-quarter operating profit since 2017.
Sales hit a quarterly record of 76.5 trillion won, up from 61.5 trillion won from a year earlier, on the back of strong finished product businesses with expanded sales of premium smartphones.
On a quarterly basis, Samsung’s operating profit was down 12.3 percent from the third quarter due to one-off costs, including employee bonuses. Sales were up 3.5 percent.
Samsung said its mainstay chip business posted quarterly sales of 26 trillion won and an operating profit of 8.84 trillion won.
While demand for memory chips used in servers was strong, earnings declined from the previous quarter because of the continued global supply chain issue and a slight drop in average selling prices, it said.
The chip contract manufacturing, or foundry, business logged record-high revenue, it said, without providing detailed figures.
Its profitability, however, decreased a bit from the third quarter “due to a rise in costs related to ramping up advanced process nodes,” it added.
During a conference call, the company said its chip business is likely to face lingering uncertainties regarding memory chip demand this year.
But the release of new mobile products, strengthened 5G lineup and increased IT investments could limit the effects of slow seasonality and global supply chain issues, it said.
People walk past a Samsung smartphone store in Seoul on Jan. 20, 2022. (Yonhap)
Samsung said it refrained from pushing aggressively to expand sales in the fourth quarter in what it said was a “strategic choice.”
Samsung said it made the decision to best respond to the market that is “becoming more diversified” and to have the ability to “supply the products that the customer needs based on having an optimized product mix.”
The component shortage appears to have also eased in the fourth quarter, contributing to bigger smartphone shipments estimated to be around 67 million in the October-December period, up around 7 percent from a year earlier, according to Counterpoint Research.
Samsung’s Mobile eXperience (MX) and networks unit reported 28.95 trillion won in sales and 2.66 trillion won in operating profit.
While revenue grew slightly thanks to brisk sales of premium products, such as foldable phones, profit declined quarter-on-quarter as marketing expenses increased, the company said.
Samsung said last month it sold four times as many foldable Galaxy Z series phones in 2021 as the previous year, further solidifying its lead in the fast-growing new smartphone segment. It did not disclose shipment figures.
The total sales of the Galaxy Z series is believed to be around 8-9 nine million units last year, led by the popularity of the Galaxy Z Fold3, which folds in half like a book, and the clamshell-type Galaxy Z Flip3 among young tech-savvy consumers.
Both models were released in August last year.
Counterpoint Research estimated Samsung will dominate the market with a 75 percent market share until 2023.
The undated file photo shows the Samsung office in Gangnam, southern Seoul. (Yonhap)
Meanwhile, Samsung’s capital expenditures hit 48.2 trillion won in total last year, including 43.6 trillion won for semiconductors.
The spending focused on expanding capacity and process migrations at its chip fabrication plants in Pyeongtaek, about 70 kilometers south of Seoul, and Xi’an in China to pump up demand for advanced nodes, it said.
For the full year, the company’s chip business reported more than 94 trillion won in revenue, surpassing Intel by sales.
The company’s total yearly sales came at a record-high 279.6 trillion won, up 18 percent year-over-year, while operating profit was 51.6 trillion won, up 43.45 percent.
In December, the tech giant revamped its leadership and streamlined the company’s structure by replacing all three of its CEOs, and merging the consumer electronics and IT and mobile communications divisions.
The move, the company said, was to strengthen the synergy among the different units and help drive new businesses and technologies.
Samsung scrapped its decades-old seniority-based top-down approach to nurture young talent and create a more flexible corporate culture. It also overhauled its position system and incorporated ranks to make the company structure more simplified and nimble.
Samsung shed 2.73 percent to close at 71,300 won, compared with a 3.5 percent decline in the wider market.
(Yonhap)
