The world’s largest maker of memory chips and smartphones also helped buoyant smartphone sales during the quarter.
The world’s largest maker of memory chips and smartphones also helped buoyant smartphone sales during the quarter.
Samsung Electronics Co Ltd on Thursday reported an estimated 50% rise in quarterly operating profit, posting its highest first-quarter profit since 2018, beating expectations as solid demand supported memory chip prices.
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The world’s largest memory chip and smartphone maker’s gains were also supported by buoyant smartphone sales in the quarter and a disruption at a rival NAND flash chip factory, analysts said.
Samsung put its first-quarter profit at 14.1 trillion won ($11.6 billion) in a preliminary earnings release, versus Refinitiv’s SmartEstimate of 13.3 trillion won. Revenue likely rose 18% from the same period last year to a record 77 trillion won, also beating market expectations.
“The guidance exceeded market expectations, likely due to better-than-expected memory chip shipments and prices,” said Park Sung-soon, an analyst at Cape Investment & Securities.
Although memory chip prices slumped in the first quarter, analysts said solid demand from data center customers, along with cautious capital spending by chipmakers and limited capacity expansion, boosted Samsung’s chip profits, which account for about half of total profits.
The chipmaker also likely benefited from a disruption at a rival NAND flash chip factory owned by Japan’s Kioxia and America’s Western Digital due to raw material contamination.
“After Kioxia’s contamination issue, I think there were rush orders for NAND flash chips to Samsung for products Kioxia was supposed to secure,” Park said.
The disruption at the Kioxia facility in early February is expected to push NAND flash prices up 5% to 10%, offsetting the impact of slightly high buyer inventories, data provider TrendForce said.
According to Counterpoint Research, Samsung shipped an estimated 72 million smartphones in the first quarter, down about 11% year over year, largely due to a later-than-usual release of its latest flagship smartphone, the Galaxy S22.
According to Sujeong Lim, Associate Director at Counterpoint, the Galaxy S22 series sold around 50% more than its predecessor, the S21, in the first week after its launch in late February.
Samsung is estimated to have shipped just over 6 million units of the S22 series by the end of March, Lim said, adding that sales were in line with initial expectations.
Samsung will release detailed results on April 28, when investors will be interested in comment on its M&A plans, how it plans to run its memory chip business to boost profitability, and the outlook for chip demand.
Samsung shares fell 0.2% in morning trade versus a 0.9% decline in the broader market.
