SEOUL (Reuters) – Samsung Electronics Co Ltd reported on Friday that operating profit in the fourth quarter rose 26% due to remote broadcast activity with coronavirus infection and TV watching encouraging sales of chips and display panels.
However, probable profits fell about 27% compared to the previous quarter, analysts said, due to weaker smartphone sales, marketing costs and a strong gain against the U.S. dollar.
The estimated $ 9 trillion won ($ 8.24 billion) was provided by South Korean tech giant for profit in the fourth quarter of December according to a 9.1 trillion analyst forecast won by Refinitiv SmartEstimate. That analyst’s forecast was returned from 9.5 trillion earlier in the week.
Samsung, the world’s largest memory chip provider and smartphone maker, also said revenue was projected to rise 1.9% to 61 trillion.
The company provides only estimates of quarterly revenue and operating profit in its first disclosure of earnings. Full earnings are due later in the month.
“Work from home will be involved,” said Park Sung-luath, an analyst at Cape Investment & Securities. “Samsung’s supply ideas, and investments in non-memory chips, will be issues to look out for when full results are announced.”
Park said analysts would be keeping a close eye for an update on an earthquake in Taiwan last month, which briefly halted memory chip production at competing DRAM makers. While demand usually rises in response to a supply disruption, the TrendForce researcher said the quake did not appear to have caused any capacity loss.
Analysts expect Samsung to report a jump in souvenir shipments in the fourth quarter of December, compared to the previous quarter, in opposition to lower prices.
These prices are likely to rebound in the first half of this year, analysts said, as data center customers return to buying chips, as well as demand from smartphones 5G, notebooks, graphics and automation.
Samsung’s share price was driven by a global shortage of chips that forced companies to scramble to gain production capacity from contract chip manufacturers, or foundries.
Samsung Electronics shares rose 1.3% in morning trading, compared to a 2.1% rise in the overall market, after rising about 56% since September.
South Korea expects semiconductor exports to rise by more than 10% in 2021, as the pandemic encourages companies to increase bandwidth for remote operation and consumer device purchases.
U.S. memory chip peers Micron Technology Inc. on Thursday forecast second-quarter earnings above Wall Street estimates.
SLUMP SMARTPHONE
On the flip side, Samsung appears to have recorded a 17.5% drop in smartphone carriers in the fourth quarter of December compared to the previous quarter, Counterpoint Research said, due to a high base from crude sales in the UK. September fourth and competition from Apple’s new iPhone 12.
Samsung is expected to unveil its latest flagship phone next week. That would have been earlier than in previous years, Counterpoint said a strategy that tended to target the gap left by Huawei Technologies losing market share after U.S. government regulations restricted its make provision.
A strong gain against the U.S. dollar also declined profits. Samsung makes most of its profits in dollars but reports have been earned.
(Won $ 1 = 1,093.0600)
Reciting with Joyce Lee and Heekyong Yang; Edited by Jane Wardell