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Samsung Electronics Expects 52% Rise in Quarterly Working Revenue

Samsung Electronics Expects 52% Rise in Quarterly Working Revenue

SEOUL—

Samsung Electronics Co.

is forecasting a roughly 52% bounce in its fourth-quarter working revenue from the year-ago interval, lifted by resilient demand for reminiscence chips and improved returns from its contract chip-making enterprise.

The world’s largest smartphone and memory-chip maker expects working revenue of about 13.8 trillion South Korean received, equal to about $11.4 billion, for the quarter ended Dec. 31. That compares with about 9.05 trillion received for the year-earlier quarter.

Samsung’s estimated fourth-quarter working revenue was under market expectations however the electronics large stated the drop mirrored a one-time bonus paid to staff.

The Suwon, South Korea-based firm estimates it generated 76 trillion in gross sales, roughly a 24% achieve from a 12 months in the past and a quarterly income document for the corporate.

Samsung’s top-line increase displays ongoing energy for chip makers which have loved elevated demand throughout a long-lasting provide crunch. The corporate is taken into account a bellwether for the tech world as it’s each a serious electronics maker and elements provider to huge tech corporations together with

Apple Inc.

and

Sony Group Corp.

Samsung and lots of different chip makers have seen their revenues bounce, as a pandemic-fueled surge in demand for all types of units requiring semiconductors has created widespread shortages and a run up in costs.

A world chip scarcity is affecting how shortly we are able to drive a automotive off the lot or purchase a brand new laptop computer. WSJ visits a fabrication plant in Singapore to see the advanced means of chip making and the way one producer is making an attempt to beat the scarcity. Photograph: Edwin Cheng for The Wall Road Journal

Analysts polled by S&P International Market Intelligence on common anticipated the corporate to publish about 15.2 trillion received in working revenue, and 75 trillion received in income. Samsung is because of report full earnings later this month.

Shares in Samsung rose 1.3% in early Friday buying and selling in South Korea.

Costs of reminiscence chips—each DRAM and NAND flash—had been anticipated to drop within the closing three months of final 12 months, as the worldwide semiconductor scarcity stalls the meeting of varied tech merchandise requiring reminiscence.

However earnings held up, as the value decline was smaller than anticipated as a result of strong demand for server reminiscence chips specifically, coupled with the gradual easing of the chip scarcity, stated CW Chung, head of Asia expertise analysis at

Nomura Holdings Inc.

Fourth-quarter costs of DRAM are projected to have fallen by as much as 8% from the prior quarter, whereas the identical costs of NAND flash are anticipated to have decreased by as much as 5%, in accordance with TrendForce, a Taiwan-based market researcher.

Reminiscence costs are anticipated to fall additional within the first half of this 12 months, although momentary manufacturing changes at Samsung’s reminiscence manufacturing amenities in Xi’an, China, not too long ago hit by Covid-19 lockdowns, could assist mood the decline, in accordance with analysts.

Samsung’s contract chip-manufacturing enterprise is predicted to see elevated earnings within the fourth quarter, as corporations have been capable of cost larger costs amid capability shortfalls relative to demand, Mr. Chung stated.

The chip manufacturing business is now on a serious funding spree to lift manufacturing capability. Final 12 months, Samsung Group stated it will make investments greater than $205 billion over the following three years, with chip-making a precedence. Samsung Electronics introduced a $17 billion funding in Taylor, Texas, in November because it strikes ahead with ambitions to develop its chip prowess outdoors reminiscence.

Intel Corp.

not too long ago pledged to construct new chip-making amenities in Europe valued at as much as $95 billion, whereas

Taiwan Semiconductor Manufacturing Co.

has stated it will spend a document $100 billion over the following three years to extend manufacturing capability.

In the meantime, Samsung’s smartphone enterprise is predicted to have logged a comparatively stable quarter thanks partially to a powerful pushout of its premium foldable telephone lineup—the Galaxy Z Fold 3 and Galaxy Z Flip 3. Advertising prices, although, are anticipated to have weighed on profitability.

Final month, Samsung stated world-wide gross sales of its foldable units in 2021 was 4 occasions larger than the prior 12 months’s document. It didn’t disclose the cargo quantity.

Nevertheless, element shortages are persevering with to take a toll on the telephone business. Provide of chips equivalent to software processors, energy administration chips and show drivers stay tight, capping shipments, stated Tom Kang, a Seoul-based analysis director at Counterpoint Analysis.

“The element scarcity is bettering however provide nonetheless stays tight. Samsung might have executed higher on this quarter if the semiconductor scarcity state of affairs was relieved earlier,” Mr. Kang stated.

Counterpoint estimates that Samsung shipped round 67 million telephones within the fourth quarter, a roughly 7% enhance from the identical interval within the prior 12 months. However in pre-pandemic 2019, Samsung had shipped 70.4 million items within the fourth quarter.

Samsung not too long ago revamped its management and realigned its core companies, because it seems to bolster its management in semiconductors and revitalize its smartphones enterprise.

Final month, the South Korean tech large changed all three of its co-CEOs and merged its cell and consumer-electronics items right into a single unit. The consolidation is predicted to raised place Samsung to work extra simply throughout its product classes from cell units to different client electronics units.

Write to Jiyoung Sohn at jiyoung.sohn@wsj.com

Corrections & Amplifications
Samsung Group stated it will make investments greater than $205 billion over the following three years, with chip-making a precedence. An earlier model of this text incorrectly stated Samsung Electronics would make investments greater than $250 billion. (Corrected on Jan. 6.)

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