Samsung Predicts Memory Market Rebound in 2021 Following Profitable Quarter
Samsung Electronics Co. exceeded profit forecasts for the third quarter and anticipates a rebound in the semiconductor industry in the coming year.
The world’s largest maker of memory chips and smartphones said on Tuesday that net income fell 40 percent to 5.5 trillion won ($4.1 billion) in the September quarter, compared with an analyst estimate of 2.52 trillion won, according to data compiled by Bloomberg. That’s an improvement on the 86 percent decline a quarter earlier.
Samsung’s core chip division posted an operating loss of 3.75 trillion won, down from 4.4 trillion won in the previous quarter. Three analysts interviewed by Bloomberg estimated the loss at 3.6 trillion won and 3.8 trillion won. The company’s mobile panel business also improved “significantly” with the launch of flagship models from major customers, including Apple Inc.’s iPhone 15.
Samsung shares rose 1.5 percent at the beginning of Tuesday.
The $160 billion memory chip market has been hit by declining demand for smartphones and personal computers. They are the main products that contain semiconductors from Samsung and rival SK Hynix Inc. Memory chip prices fell, and most chipmakers pulled back from investing in new capacity. Investors have been desperately waiting for signs of recovery.
When Samsung reported preliminary results earlier this month, its revenue fell 13% in the quarter and operating profit fell 78%, but the profit decline was more modest than the previous quarter and its stock rose. Then Intel Corp. forecast a rebound in sales growth in the fourth quarter, driven in part by improved demand for personal computers, and its inventory grew the most in nearly three years.
Samsung predicted that the prices of memory chips will increase in the last quarter compared to the current quarter. It said the overall demand for such components will increase with the development of AI applications.
The company said it will spend about 53.7 trillion won in total capital expenditures this year, up from 53.1 trillion won last year. Of that, about 47.5 trillion won will be used for semiconductor investment, down slightly from 47.9 trillion won in 2022.
Tuesday’s report of Samsung’s full quarterly results comes weeks after the United States granted the company and SK Hynix an exemption to acquire the equipment they need to maintain and expand their chip-making operations in China. This has removed the uncertainty above the two memory leaders, allowing them to operate in the world’s largest chip arena in the long term.
Two Korean chipmakers are competing to develop the tools needed to practice artificial intelligence. Samsung is now catching up with SK Hynix, the sole supplier of next-generation DRAM to AI chipmaker Nvidia Corp. Samsung has said it plans to double its capacity to make high-bandwidth memory with the capacity needed to speed up artificial intelligence training by 2024.
