Samsung Expects A Recovery In The Tech Device Industry As Well As More Supply Chain Challenges

After disclosing its finest fourth-quarter profit in four years, Samsung Electronics Co Ltd predicted a recovery in worldwide tech device demand in 2022 but cautioned of currently underway challenges from supply chain challenges and COVID-19.

Samsung Electronics Co Ltd predicted a recovery in worldwide tech device demand

The world’s top memory chip and smartphone manufacturer said it expects development in its chip sector and also in smartphones this year, however, non-memory chip supplies are anticipated to stay constrained.

Server demand was predicted to rise due to increased IT spending and new high-core computer processors, whereas mobile chip demand was predicted to rise due to the introduction of 5G-capable devices.

Owing to 5G deployment, the need for high-performance computers, greater outsourcing from chip development and manufacturing businesses, and sustained inventory demand, non-memory chip supply is projected to remain tight, according to the report.

Samsung’s fourth-quarter net profit increased by 53% to 13.9 trillion won ($11.6 billion), meeting the company’s projection, thanks to strong memory chip sales and greater margins in chip contract manufacturing.

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The chip business, the company’s largest segment, saw profits more than quadruple from the same quarter a year ago, reaching 8.84 trillion won.

Despite this, experts said the profits were lower than projected due to cautious memory chip sales, R&D spending, and one-time year-end bonuses.

In a report, Samsung said it originated below with its initial memory chip shipment instruction after refraining from aggressively expanding sales, signaling a boost to take priority of profits over volume.

In the fourth quarter, the net profit of Samsung’s mobile division increased by 9.9% year on year to 2.66 trillion won.

Despite continuing uncertainties pertaining to a prolonged pandemic and component scarcities, Samsung expects the smartphone industry to expand in 2022 and the wearable industry to grow by double digits.

Samsung said on Wednesday that its new flagship smartphone model will be unveiled on February 9.

Analysts predict the new flagship smartphone release to boost mobile shipments and margins, but a modest drop in DRAM chip pricing is projected to hurt the tech giant’s profitability as opposed to the previous quarter.

Rival chipmaker Intel reports record quarterly revenue

Intel Corp reported record fourth-quarter revenue but estimated first-quarter profits short of Wall Street projections, citing issues tied to chronic worldwide supply chain problems.

Intel shares managed to recover a few ground after the business exhibited confidence in supply for its chips and the potential to handle supply chain constraints, after initially falling about 3 percent in late trade.

According to IBES statistics from Refinitiv, Intel expects first-quarter earnings per share of 80 cents, opposed to a forecast of 86 cents.

Intel’s forecasted gross margin of 52 percent was within its historical range for the next two to three years, but it sparked concerns.

Micron Technology Inc (MU.O), a memory chip rival, anticipated market-beating sales and earnings for the following quarter in December, with chip shortages expected to ease in 2022.

The company’s net profit increased by 64% to 10.8 trillion won. Revenue increased by 24% to a new high of 76.6 trillion won.

Samsung shares dipped 0.8 percent in early trade on Thursday, compared to a 1.6 percent decrease in the broader market (.KS11).

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