Samsung reports 53pc jump in profit despite supply chain woes

SEOUL: South Korean tech giant Samsung Electronics said Thursday its operating profit rose 53.3 percent in the fourth quarter of 2021, as record sales helped overcome pandemic-induced supply chain challenges.

The world’s biggest smartphone maker said its operating profit rose to 13.87 trillion won ($11.55 billion) for the October-December period in 2021, up from nine trillion won in the same quarter the previous year.

Thanks to high memory chip prices and strong consumer demand, Samsung had its highest annual sales of 279.6 trillion won in 2021, an 18 percent jump from a year earlier, the company said in a regulatory filing.

Samsung achieved “record sales thanks to competitive products, despite continuing uncertainty,” the tech giant said in a statement, singling out solid demand for its premium smartphone lines.

While the Covid-19 pandemic has wreaked havoc on the global economy, it has helped many tech companies boom.

Pandemic-driven working from home has boosted demand for devices powered by Samsung’s chips, as well as home appliances such as televisions and washing machines.

But LG Electronics, South Korea’s second-largest appliance firm after Samsung, saw its operating profit shrink by 21.4 percent in the fourth quarter on-year to 677.7 billion won.

The world’s biggest memory chip maker, Samsung Electronics has aggressively stepped up investment in its semiconductor business as the world battles chip shortages that have hit everything from cars and home appliances to smartphones and gaming consoles.

The global chip supply shortage is expected to persist well into the new year, analysts have said.

“In the Memory Business, demand is expected to grow as enterprises ramp up IT investments while the Company will expand supply of high-performance products,” Samsung said.

In November Samsung announced a new microchip factory in Texas, a $17 billion investment. The plant is expected to be operational by the end of 2024.

Samsung is also investing in the development of advanced technologies such as artificial intelligence and robotics, as well as 5G and 6G communications.

Park Sung-soon, an analyst at Cape Investment & Securities, said that memory chip prices were likely to decline in the first half of 2022.

“Samsung’s profit is likely to dip for the January-June period. But we also expect chip prices to turn around in the second half, giving a boost to company profits,” he said.

“We had forecast around a 10 percent fall in chip prices in the first months of 2022 but it appears now that the decline scope will be smaller with solid demands for PCs and improved supply chains.”

Consumer demand for high-end products, such as foldable phones, also helped to further boost profits around the holiday season.

Samsung said it expected the smartphone and premium television market to grow in the third year of the pandemic, though it anticipated sustained “uncertainties triggered by COVID 19 and supply and logistics issues”.