Samsung Records 53 Percent Increase in Year-on-Year Profit in Q4 2021 Despite Pandemic Challenges


South Korean tech giant Samsung Electronics said on Thursday that its operating profit rose 53.3 percent in the fourth quarter of 2021, as record sales helped it overcome supply chain challenges induced by the pandemic.

The world’s largest smartphone maker said that its operating profit for the October-December period in 2021 stood at KRW 13.87 trillion (about Rs 86,695 crore), up from KRW nine trillion (about Rs 56,250 crore) in the same quarter last year. Was.

Thanks to higher memory chip prices and strong consumer demand, Samsung had the highest annual sales of KRW 279.6 trillion (about Rs 17,47,420 crore) in 2021, an 18 percent jump from a year ago, the company said in a regulatory filing. said in.

samsung The tech giant achieved “record sales thanks to competitive products, despite continued uncertainty”, the tech giant said in a statement, isolating solid demand for its premium smartphone lines.

Whereas COVID-19 While the pandemic has wreaked havoc on the global economy, it has helped many tech companies boom.

The work-from-home pandemic has stoked demand for appliances powered by Samsung’s chips, as well as household appliances such as televisions and washing machines.

The world’s largest memory chip maker, Samsung Electronics, has aggressively increased investments in its semiconductor business as the world grapples with chip shortages that have affected everything from cars and home appliances to smartphones and gaming consoles.

Analysts have said the global chip supply crunch is expected to continue well into the new year.

rising demand

“Demand in the memory business is expected to increase as enterprise IT investments increase, while the company expands the supply of high-performance products,” Samsung said.

In November, Samsung announced a new microchip factory in Texas, with an investment of $17 billion (about Rs 1,27,830 crore). The plant is expected to be operational by the end of 2024.

Samsung is also investing in the development of advanced technologies such as artificial intelligence and robotics, as well as the development of 5G and 6G communications.

Park Sung-soon, an analyst at Cape Investment and Securities, said a drop in memory chip prices is likely in the first half of 2022.

“Samsung profits are likely to decline in the January-June period. But we also expect a change in chip prices in the second half, which will boost the company’s profitability.

“We projected chip prices to drop by about 10 percent in the first months of 2022, but it now appears that the decline will be smaller with solid PC demand and improved supply chains.”

Consumer demand for high-end products like foldable phones also helped boost profits further during the holiday season.

Samsung said it expects the smartphone and premium television market to grow in the third year of the pandemic, although it anticipates “uncertainties arising from COVID 19 and supply and logistics issues” to persist.

Operating profit generated from Samsung’s semiconductor business accounted for over 63.7 percent of the Q4 total, which plays a major role in this huge conglomerate.

Samsung’s operating profit from the semiconductor division stood at KRW 8.8 trillion (about Rs 55,010 crore) for the October-December period.

Samsung Electronics is a major subsidiary of the giant Samsung Group, by far the largest of the family-controlled empires known as Chaebol, which dominated business in South Korea.

The group’s total turnover accounts for about a fifth of South Korea’s GDP.

Samsung Electronics’ record sales last year came as Lee Jae-yong, the firm’s vice president and de facto leader of the broader Samsung Group, returned to management upon parole release from prison last August.

Lee had spent half of his two-and-a-half-year sentence for bribery, embezzlement and other offenses in connection with the corruption scandal that brought down former South Korean President Park Geun-hye before his release.

His return to management has eased decision-making concerns at Samsung.