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Samsung Electronics Confirms First Quarter Profit Likely Grew By 44%

Samsung Electronics Confirms First Quarter Profit Likely Grew By 44%
South Korean electronics giant Samsung Electronics Co Ltd confirmed previous reports and estimates of its first-quarter profit on Wednesday, saying that it expects its profits for the period to rise grow by 44 per cent as analysts attributed the rise to surge in sales of smartphones and TVs even though the profit was partly hit by a possible drop in the earning of the company from its semiconductor business following the company being forced to halt production at its plant in the United States after a fierce storm.
In its forecast for its operating profit for the January-March quarter, the South Korean technology giant estimated it to come around 9.3 trillion won ($8.32 billion) which was in line with a weighted average analyst forecast from Refinitiv SmartEstimate.
The likely operating profit for Samsung’s mobile division for the quarter would be more than 1 trillion won at about 4.15 trillion won, according to analysts. According to research provider Counterpoint, during the quarter the company noted a much better performance for its flagship Galaxy S21 smartphone series compared to its previous versions by a margin of two-to-one in the six weeks since it was launched in the market in January.
Counterpoint said that during the quarter, the largest smartphone maker of the world benefitted from a lower starting price for the flagship model of its smartphones with the S21 priced $200 lower than the S20.
Analysts also noted the likelihood of more than doubling of the profits of the company from its television set and home appliance division at around 1 trillion won because of continued demand for the gadgets from people staying back home because of the pandemic.
In comparison, its largest ever preliminary quarterly operating profit of 1.5 trillion won for January-March quarter was announced on Wednesday by local rival in the consumer electronics segment LG Electronics.
According to estimates of analysts, there was a likely drop of 20 per cent in the profits for Samsung’s chip division to 3.6 trillion because of additional expenditure towards increasing domestic production as well as because of losses encountered at the company’s Texas manufacturing after a production halt there in the middle of February which did not allow the company to benefit from the strong global demand for chips.
The wider chip industry is forecasting market beating estimates riding on the increased demand for chips globally. For example, the United States based memory chip maker Micron Technology Inc forecast its third quarter revenue above analyst estimates because of continued strong demand because of the growing trend of working and attending classes from home.
According to data from TrendForce, for the January-March quarter, there was a 5.3 per cent quarter on quarter growth in the price of DRAM chips that are widely used in laptops and other computing devices. And according to analysts, this trend is set to continue for some time as clients are likely to gobble up any supplies of chips because of the global chip shortage. 
“Prices are likely to rise further in the current quarter due to solid demand for servers,” said analyst Park Sung-soon at Cape Investment & Securities.

Christopher J. Mitchell

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