Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Samsung Elec sees component shortages persisting in H2, solid server chip demand

Economy Apr 28, 2022 06:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The logo of Samsung Electronics is seen at its office building in Seoul, South Korea, March 23, 2018. REUTERS/Kim Hong-Ji 2/2

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) - Samsung Electronics (OTC:SSNLF) Co Ltd said on Thursday it expects firm data centre demand for high-margin memory chips to continue in the second half, but warned component shortages will likely persist as well.

The world's top memory chip and smartphone maker said underlying server chip demand appears "relatively solid" as companies boost investments and look to new technologies to increase their business.

"Companies are now expanding IT infrastructure, and cloud companies are expanding investments to explore new growth areas like artificial intelligence and machine learning," said Han Jin-man, executive vice president of Samsung (KS:005930)'s memory chip business during an earnings call.

"However, there are still some parts supply issues, which could lead to disruptions. We're going to monitor demand fluctuations very closely and intend to provide supply that fits the demand," he said.

Samsung forecast weaker demand for mobile phone and personal computer chips in Q2 as consumers weather issues such as rising inflation and COVID-19 lockdowns, but corporate PC demand is expected to remain solid, while more 5G-capable phone rollouts in the second half could lift mobile demand.

Memory chip rival SK Hynix offered a similar outlook on Wednesday.

Analysts said Samsung's recent focus on selling more high-margin memory products to prioritise profitability over volume would ultimately limit shipments and help boost DRAM prices later in the year, as would the limited increases in chip production capacity due to delivery delays in chipmaking gear.

In the chip contract manufacturing business which counts Qualcomm (NASDAQ:QCOM) and Nvidia (NASDAQ:NVDA) as clients, Samsung said its order book for the next five years was eight times its 2021 revenue.

It plans to win more top-tier customers for chip manufacturing in fields outside mobile phones, such as high performance computing, network equipment and the automotive industry.

Samsung forecast continued growth in the smartphone market in the second half despite component shortages, and expected the foldable phone market to double in size from the previous year.

PROFIT JUMP

The South Korean giant confirmed a 51% rise in operating profit to 14.1 trillion won ($11.1 billion) for the quarter ended March 31, in line with its previous forecast. It was the company's highest first-quarter profit since 2018.

Still, Samsung shares traded down 0.6% on Thursday, compared with a 0.7% rise in the wider market, extending a year-to-date fall of 17%.

"Samsung's stock price is a market issue, rather than an issue arising from the company," said Park Sung-soon, analyst at Cape Investment & Securities.

"In the past, when the memory chip industry was very cyclical, there was high visibility in demand, so investment was attractively predictable. But now there are all these macro issues and low demand visibility."

Profits at its chip business rose to 8.45 trillion won, more than double the 3.36 trillion won a year earlier, fueled by record sales of server chips in the quarter.

Profits at the mobile and network business came in at 3.8 trillion won in the first quarter, down 13% from a year ago. Sales were supported by ramped-up production of the mid-to-low-end Galaxy A series and the launch of Samsung's flagship Galaxy S22 series, said Canalys analyst Sanyam Chaurasia.

Overall revenue rose 19% to a record 77.8 trillion won.

($1 = 1,271.3900 won)

Samsung Elec sees component shortages persisting in H2, solid server chip demand
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email