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World's largest mobile maker to record its biggest ever profit since 2018
new Delhi , Samsung Electronic Company Limited may register its highest quarterly profit ever since 2018. The main reason for the profits is believed to be the stability in prices due to the increasing demand for memory chips.
The world's largest smartphone and memory chip maker is expected to report operating profit of $10.9 billion (13.3 trillion won) in the quarter ended March, according to Refinitiv Smart Estimates of 13 analysts. This is 41 percent higher than the profit of 9.38 trillion won in the first quarter of 2018. Samsung will present preliminary figures on Thursday.
Chip business doubles profit
Samsung's memory chip profit is expected to reach 7.6 trillion won ($6.26 billion), more than double last year's 3.37 trillion won ($2.77 billion). About half of the company's total profits come from the chip business. Analysts say chip prices outperformed estimates. According to him, the way companies had already stocked up to deal with the chip problem, their demand was inevitable. However, strong demand and wise investments have given substantial support to the sector. According to Doe Hyu-woo Data, analyst at NH Investment and Securities, rising chip demand in the centres, careful investment by chip makers and selling of high-end products controlled the falling chip prices.
Decline in mobile business profits
According to analysts, the profit from Samsung's mobile business will be marginal this time compared to the same quarter last year. This time it was estimated to be 4.04 trillion won ($ 3.32 billion), while last time it was 4.39 trillion won ($ 3.61 billion). However, it will be higher than the profit earned during 2017-20 in the same period.
Russo-Ukraine war will have little effect
Greg Roh, head of Hyundai Motors Securities, has said that Samsung's flagship phone Galaxy S22, which was launched in February, is expected to sell 8 million units in the first quarter of this fiscal. Samsung has a 30 percent share in Russia's smartphone market. However, Roh says that due to the Russo-Ukraine war, this will not have a significant impact on Samsung's profits. He says that even though Samsung has a major share in the Russian market, only 2 percent of Samsung's total business comes from Ukraine and Russia and the company will make up for this loss through sales in other countries.
Samsung shares fell 12 per cent on a year-to-date (YTD) basis amid reports of reduced chip manufacturing and fears of the Russo-Ukraine war weakening demand for tech products around the world. The company's co-CEO, while addressing shareholders last month, said that the production of the 5-nanometer chip is gradually improving.