Skip to Content

Samsung says profits likely jumped 44% despite chip supply problems

KTVZ

Samsung expects to have pulled off a strong first quarter, even as one of its chipmaking facilities was temporarily shut by a brutal US winter storm earlier this year.

The South Korean conglomerate said Wednesday that it likely made about 9.3 trillion Korean won ($8.3 billion) in operating profit from January to March, marking a 44% jump compared to the same period last year.

It also expected sales to have climbed about 17% year-on-year, to approximately 65 trillion Korean won ($58.2 billion). The preliminary results were roughly in line with estimates forecast by analysts polled by data provider Refinitiv.

Samsung’s semiconductor plant in Austin, Texas was forced to shut down in February after the state was hit by widespread power outages related to a massive winter storm, but “reached production close to normal levels as of end of March,” according to a statement from the company.

Analysts estimate that the disruption cost the company about 400 billion Korean won ($358 million). That’s assuming that 100,000 semiconductor wafers “were discarded,” according to Jae-yun Lee, an analyst at Yuanta Securities.

The suspension struck at a particularly unfortunate time: the global chip industry has been grappling with a supply crunch for months, with many players failing to keep up with demand.

Last month, Samsung co-CEO Koh Dong-jin told investors that the tech giant was having trouble with its supply chain. The company was scrambling to address the dearth of semiconductors, and could continue to face problems in the second quarter, he added.

But as the situation in Austin continues to improve, recovering output “should start to drive earnings growth for” Samsung’s chip division, CW Chung, an analyst at Nomura, wrote in a note to clients on Wednesday.

Nomura’s analysts also expect an increase in prices for certain semiconductor components in the second quarter, which they believe could help boost the company’s results in the coming months.

Samsung smartphones are expected to shine, too. The company released its new Galaxy S21 devices this January, earlier than usual, and its “momentum” in the space “should stand out,” Lee wrote in a recent research note previewing first quarter performance.

Samsung did not break down its earnings in its preliminary release. The company will report full results later this month.

Article Topic Follows: Technology

Jump to comments ↓

CNN Newsource

BE PART OF THE CONVERSATION

KTVZ NewsChannel 21 is committed to providing a forum for civil and constructive conversation.

Please keep your comments respectful and relevant. You can review our Community Guidelines by clicking here

If you would like to share a story idea, please submit it here.

Skip to content