Samsung Elec sees tech device recovery in 2022, more supply chain challenges

The logo of Samsung Electronics is seen at its office building in Seoul, South Korea South Korea, October 11, 2017. REUTERS/Kim Hong-Ji

SEOUL, Jan 27 (Reuters) – Samsung Electronics Co Ltd (005930.KS) on Thursday forecast a recovery in global tech device demand in 2022 after reporting its best fourth-quarter profit in four years, but warned of ongoing challenges from supply chain issues and COVID-19.

The world’s largest memory chip and smartphone maker said it expected growth across its chip business this year, as well as in smartphones, although supplies of non-memory chips were likely to remain tight.

For memory chips, it expected server demand to grow due to an increase in IT investments and new high-core computer processors, while mobile chip demand was likely to increase due to an increase in 5G-capable models.

Supply of non-memory chips was expected to remain tight due to 5G penetration, demand for high performance computing, increased outsourcing from chip design and manufacturing firms and continued inventory demand, it said.

Samsung posted a 53% rise in fourth-quarter operating profit to 13.9 trillion won ($11.6 billion), in line with a company forecast, helped by brisk sales of memory chips and higher margins in chip contract manufacturing.

Profits at its chip business, its largest division, more than doubled from the same quarter a year ago to 8.84 trillion won.

Still, analysts said the profits were lower than the market had expected due to conservative shipments of memory chips, R&D costs and one-off year-end bonuses.

Samsung said in a statement it came in below its initial guidance for memory chip shipments after refraining from pushing aggressively to expand sales, signaling a push to prioritise profits over volume.

Operating profit at Samsung’s mobile business rose about 9.9% on-year to 2.66 trillion won in the fourth quarter.

In 2022, Samsung forecast the smartphone market is expected to continue to grow and the wearable market likely to see double-digit growth, despite persisting uncertainties related to prolonged pandemic and component shortages.

Samsung said on Wednesday it will unveil its latest flagship smartphone model on Feb. 9.

The new flagship smartphone release is expected to lift mobile shipments and margins, analysts said, but a further slight decline in DRAM chip prices is likely to weigh on the tech giant’s profits compared with the previous quarter.

Rival chipmaker Intel on Wednesday forecast first-quarter earnings falling short of Wall Street expectations, as constraints related to persistent global supply chain issues and strong demand for chips continues. read more

Memory chip rival Micron Technology Inc (MU.O) in December had forecast market-beating sales and profits for its upcoming quarter with chip shortages easing in 2022. read more

Net profit rose 64% to 10.8 trillion won. Revenue rose 24% to a record 76.6 trillion won.

Samsung shares fell 0.8% in early trade on Thursday, compared with the wider market’s (.KS11) 1.6% drop.

($1 = 1,197.0300 won)

Reporting by Joyce Lee & Heekyong Yang; editing by Richard Pullin

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