ZCZC
BCN-01
SKOREA-ECONOMY-TECH-TELECOMMUNICATION-SAMSUNG
Samsung Electronics forecasts 25.7% jump in Q4 operating profit
SEOUL, Jan 8, 2021 (BSS/AFP) – South Korean tech giant Samsung Electronics
flagged a jump of more than 25 percent in Q4 operating profit Friday, with
working from home under the coronavirus pandemic driving demand for the
devices powered by its chips.
The world’s biggest manufacturer of smartphones and memory chips said in an
earnings estimate that it expected operating profit of 9 trillion won ($8.23
billion) for October to December, up from 7.16 trillion won a year earlier.
The prediction was slightly short of analyst forecasts of 9.34 trillion won
compiled by market researcher FnGuide.
The figures come about two months after the burial of late chairman Lee
Kun-hee — who turned Samsung Electronics into a global powerhouse — and as
the coronavirus wreaks havoc with the world economy.
But the pandemic has also seen many tech companies boom, while South Korea
saw a return to quarter-on-quarter growth in Q3 last year, driven by a
better-than-expected exports performance.
But Samsung’s operating profit and 61-trillion-won sales forecast were both
lower than its third-quarter figures, when its mobile and chip businesses
were boosted by US sanctions against Huawei.
Analysts say a stronger won and rival Apple’s October launch of its
flagship iPhone 12 were among the factors behind the quarter-on-quarter
decline in profits.
“Samsung’s midrange and value smartphones account for about 80 percent of
its mobile sales,” said Jusy Hong, a director at market researcher Omdia.
“But Chinese firms — such as Xiomi, Vivo and Oppo — have been also
expanding their share in the midrange phone market, in regions including
India and Southeast Asia.”
Samsung Electronics is crucial to South Korea’s economic health.
It is the flagship subsidiary of the giant Samsung group, by far the
largest of the family-controlled conglomerates known as chaebols that
dominate business in the world’s 12th-largest economy.
Its overall turnover is equivalent to a fifth of the national gross
domestic product.
– Leader’s retrial –
The firm’s shares were up 1.33 percent in morning trade Friday.
Looking forward, analysts said its outlook for 2021 was fairly stable,
driven by continued demand for memory and growth in the consumer electronics
and chip-manufacturing businesses.
They also expected Samsung’s mobile business to improve, with the firm
unveiling its latest lineup of flagship Galaxy flagship phones next week.
Meanwhile, the global chip-manufacturing industry is expected to see record
revenue this year, with the stay-at-home economy persisting due to the
pandemic, according to Taipei-based market tracker TrendForce.
“2021 will be a year for the growth of Samsung foundry (chip-manufacturing)
business,” Sujeong Lim, an analyst at market observer Counterpoint, told AFP.
“Demand for semiconductors such as 5G, IoT (Internet of Things), and high-
performance smartphones is exploding.”
But the firm’s de facto leader Lee Jae-yong, the late chairman’s son, is
awaiting the verdict in his retrial over a sprawling corruption scandal,
which could see him return to prison.
The ruling is due later this month and a conviction could deprive the firm
of its top decision-maker after prosecutors requested a nine-year jail term.
BSS/AFP/GMR/0913 hrs