Samsung Says Component Supply Problems Will Affect Chip Demand, Profit Hits 3-Year High


Samsung said Thursday it expects component shortages to affect some customers’ demand for chips in the current quarter, after reporting its highest quarterly profit in three years. The warning comes as producers of products ranging from televisions to cars have faced a host of supply chain issues ranging from a shortage of parts to logic chips, labor shortages, grunts logistics and delays at parts factories due to power outages in China.

“A longer-than-expected component supply issue may need to be monitored due to potential impacts” on the manufacturing of devices using memory chips, Samsung said in a statement, although it added that it There was “a strong fundamental demand for servers resulting from increased investment by technology companies.”

The world’s largest maker of memory chips and smartphones posted a 28% increase in operating profit in the July-September quarter to KRW 15.8 trillion (around Rs 1.01,090 crore) thanks to an increase of 82% of the year-on-year profits in its chip business, where profits reached KRW 10.1 trillion (around Rs. 64,620 crore).

Higher prices and shipments of memory chips, as well as increased profitability of Samsung’s contract chip manufacturing business, boosted operating profit for the chip business.

Samsung said demand for server DRAM chips, which temporarily store data, and NAND flash chips, which serve the data storage market, is expected to remain strong in the fourth quarter due to expanding investment in data centers. data, while growth in personal computer manufacturing is expected to be sustained. in line with the previous quarter.

While supply chain issues may limit some customers’ demand for mobile chips in the fourth quarter, demand for server and personal computer chips is expected to be robust in 2022 despite the uncertainties, he said.

Samsung did not comment on the outlook for memory chip prices, which weighed on the company’s shares, with investors expecting prices to peak in the third quarter before falling until mid-2022.

Smaller rival SK Hynix struck a more bullish note than its US peers on Tuesday and forecasts steady demand for memory chips. Earlier, chipmakers Intel and Micron had said that shortages of certain components made it difficult for their customers to ship PCs.

Samsung’s mobile division operating profit fell about 24% year-on-year to KRW 3.36.6 trillion (about Rupee 21.495 crore) in the third quarter, as sales of Samsung’s new foldable smartphones increased. been tempered by marketing costs.

Despite uncertainties over component supply, year-end purchases are expected to boost demand for mobile devices in the fourth quarter, and Samsung aims to maintain double-digit profit margin in the mobile sector by selling more foldable phones and other high-end models. as portable accessories.

Net profit increased 31% to KRW 12.3 trillion (around Rs 78.700 crore). Revenues increased by 10% to a record 74 trillion KRW (approximately Rs. 4 73,450 crore).

Samsung shares were up 0.3% in early trading Thursday, compared to the broad market’s 0.1% rise. Its shares have fallen about 13% since the start of the year.

© Thomson Reuters 2021

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