Rising chip demand, higher prices drive Samsung Q3 profitRising chip demand, higher prices drive Samsung Q3 profit
Strong chip demand and higher prices have powered Samsung Electronics to one of its best quarters, with net income climbing 31.3% to 12.29 trillion won.
October 28, 2021
Strong chip demand and higher prices have powered Samsung Electronics to one of its best quarters, with net income climbing 31.3% to 12.29 trillion won ($10.5 billion).
The South Korean conglomerate boosted third quarter sales 10.5% to 73.98 trillion won – a quarterly record – and operating profit 28% to 15.82 trillion won – its second highest ever.
Figure 1: Against the odds: Despite the continued scepticism of analysts and journalists alike, Samsung's folding phone has proved popular.
(Source: Karlis Dambrans / Alamy Stock Photo)
Operating profit from the semiconductor unit was up 81% over last year at 10.1 trillion won, accounting for nearly two-thirds of total operating profit.
Most of that is from the memory side of its chip business, driven by server and PC demand. The chip foundry business also had a record quarter, with new high-end orders from global customers, and the company expects 10% sequential growth in Q4.
During an earnings call Thursday, executives said the company planned to triple foundry capacity over the next five years. It is adding production capacity to its existing plant in Pyeongtaek, South Korea, and is weighing the feasibility of building a new foundry in the US.
Samsung is at the head of the chasing pack behind TSMC in the global foundry business, with 22.5% share of the world market in Q2, well behind TSMC's 55% share.
In the fold
Samsung's mobile handset and networks business grew revenue 28% sequentially to 27.3 trillion won, though it was 8% lower compared to the same period last year.
The world's largest handset vendor said it was seeing strong demand for new foldable phones and low- to mid-range 5G smartphones. It expects to achieve "robust profitability" from growth in those segments in Q4. The company does not break out data for its mobile networks group, but said the unit had expanded in both domestic and offshore 5G markets. In 2022 it aimed to further develop its custom 5G chips and improve network virtualization capabilities as it pursued overseas opportunities.
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Light Reading. Looking ahead, Samsung said macro uncertainties, such as the component supply outlook, raw material pricing issues and changing covid policies "make it difficult to provide specific guidance" for 2022. But it said it expected continued robust server and PC demand thanks to expanding new CPU adoption and continued growth of enterprise IT investments. It said the foundry market would "remain tight due to high silicon consumption for 5G in mobile and strong GPU-led demand for HPCs." Despite the buoyant result, Samsung's stock rose just 0.86% on Thursday. The stock has under-performed this year on concerns that it is over-exposed to the heavily-cyclical memory market. Related posts: Samsung will struggle to replace Ericsson or Nokia at O2 Samsung aims to wow with aggressive chips plan US tech (and Samsung) club together on 6G — Robert Clark, contributing editor, special to Light Reading
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