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

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SEOUL (REUTERS) – Samsung Electronics on Thursday (January 27th) predicted a recovery in global demand for tech devices in 2022 after reporting its best fourth-quarter profit in four years, but warned of lingering challenges from power issues. supply chain and Covid-19.

The world’s largest memory chip and smartphone maker said it expects growth in its chip business this year, as well as smartphones, although non-memory chip supply is expected to remain constrained.

For memory chips, he expects server demand to rise due to increased IT investment and new high-core computing processors, while mobile chip demand is expected to increase due to a increase in 5G-enabled models.

Non-memory chip supply is expected to remain constrained due to 5G penetration, demand for high-performance computing, increased outsourcing by chip design and manufacturing companies, and continued inventory demand, did he declare.

Samsung posted a 53% rise in fourth-quarter operating profit to 13.9 trillion won (S$15.6 billion), in line with company forecasts, helped by buoyant memory chip sales and higher margins in contract chip manufacturing.

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

Still, analysts said earnings fell short of market expectations due to conservative memory chip shipments, research and development costs and one-time year-end bonuses.

Samsung said in a statement that earnings were lower than its initial expectation for memory chip shipments after refraining from pushing aggressively to boost sales, signaling a push to prioritize earnings over volume.

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

In 2022, Samsung expects the smartphone market to continue to grow and the wearables market to see double-digit growth, despite continued uncertainties related to the prolonged pandemic and component shortages.

Samsung announced on Wednesday that it will unveil its latest flagship smartphone model on February 9.

The new flagship version of the smartphone is expected to boost shipments and mobile margins, analysts said, but a further slight drop in Dram chip prices is expected to weigh on the tech giant’s earnings from the previous quarter.

Rival chipmaker Intel on Wednesday forecast first-quarter earnings to come in below Wall Street expectations as constraints from ongoing global supply chain issues and strong demand for chips continue.

Memory chip rival Micron Technology last December forecast above-market sales and earnings for its next quarter, with chip shortages easing in 2022.

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

Shares of Samsung fell 0.8% in early trading Thursday, compared with a 1.6% drop in the broader market.

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