April 24, 2024

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Samsung forecasts a 52% increase in profits due to the global semiconductor scarcity

Despite global semiconductor scarcity, Samsung Electronics expects a 52 per cent increase in earnings for the final three months of 2021.

During that time, the world’s largest memory chip producer claimed to have made 13.8 trillion won ($11.5 billion; £8.5 billion). That would be the company’s 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 the semiconductor contract manufacturing division.

According to technology analyst Sam Reynolds, Samsung is best positioned to gain from the unprecedented demand for PCs and electronics.

The Korean won continues to decrease, making Korea’s exports more appealing on the global market, he said, explaining how currency swings have benefited the industry.

However, the estimated profit was smaller than the 15.2 trillion won predicted by several analysts.

The company’s inability to achieve market expectations was attributed to its spending on employee bonuses and marketing for its smartphone division.

In recent months, a global scarcity of semiconductors has wreaked havoc on the industry, causing everything from carmakers to cease production to Apple declaring that iPhone shipments would be delayed. Investors are also watching the company’s chip manufacturing plant in Xi’an, China. Since December 23, the city has been under lockdown due to a coronavirus epidemic.

Last week, Samsung announced that it will “temporarily alter operations” at its Xi’an facility, but provided no details on how the changes may affect semiconductor output.

Samsung announced in November that it had chosen Taylor, Texas, as the site for its proposed $17 billion computer chip manufacturing complex.

The facility should be operational by the second half of 2024. It’s the South Korean electronics behemoth’s largest-ever investment in the US. On Friday, Samsung Electronics’ stock was up 1.8 per cent in Seoul.