Categories: Business

Samsung Electronics Q1 revenue tops market expectations on strong chip demand By Reuters

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© Reuters. FILE PHOTO: The brand of Samsung Electronics is seen at its workplace constructing in Seoul, South Korea South Korea, October 11, 2017. REUTERS/Kim Hong-Ji

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By Joyce Lee and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics Co Ltd reported on Thursday an estimated 50% leap in quarterly working earnings to put up its highest first-quarter revenue since 2018, beating expectations as strong demand underpinned costs for reminiscence chips.

Earnings on the world’s largest reminiscence chip and smartphone maker had been additionally supported by brisk smartphone gross sales within the quarter, together with a disruption at a rival NAND Flash chip plant, analysts mentioned.

Samsung (KS:) put its first-quarter revenue at 14.1 trillion gained ($11.6 billion) in a preliminary earnings launch, versus a Refinitiv SmartEstimate of 13.three trillion gained. Income doubtless rose 18% from the identical interval a yr earlier to a report 77 trillion gained, additionally above market expectations.

“The steerage beat market expectations, most likely as a consequence of reminiscence chip shipments and costs being higher than anticipated,” mentioned Park Sung-soon, analyst at Cape Funding & Securities.

Though reminiscence chip costs dipped within the first quarter, analysts mentioned strong demand from knowledge centre shoppers in addition to cautious funding spending by chipmakers and restricted capability enlargement buoyed Samsung’s chip earnings, which make up about half of its complete earnings.

The chipmaker additionally doubtless benefited from a disruption at a rival NAND Flash chip plant owned by Japan’s Kioxia and American agency Western Digital (NASDAQ:) as a consequence of contamination of uncooked supplies.

“After the contamination challenge at Kioxia, I believe there have been rush orders for NAND Flash chips made to Samsung for merchandise that had been meant to be secured from Kioxia,” Park mentioned.

The disruption on the Kioxia plant in early February is anticipated to drive up NAND Flash costs by 5%-10%, offsetting the consequences of modestly excessive inventories maintained by patrons, knowledge supplier TrendForce mentioned.

Samsung shipped an estimated 72 million smartphones within the first quarter, Counterpoint Analysis mentioned, down some 11% from a yr earlier, largely as a consequence of a later than regular launch of its latest flagship smartphone, the Galaxy S22.

The Galaxy S22 sequence globally offered some 50% extra within the first week after its late February launch than its earlier mannequin S21, in keeping with Sujeong Lim, an affiliate director at Counterpoint.

Samsung is estimated to have shipped barely over 6 million models of the S22 sequence by the tip of March, Lim mentioned, including that gross sales had been according to preliminary expectations.

Samsung is because of launch detailed earnings on April 28, when traders will probably be to listen to any feedback on its M&A plans, the way it plans to function its reminiscence chip enterprise to spice up profitability, and chip demand outlook.

Samsung shares fell 0.2% in morning commerce, versus a 0.9% drop within the wider market.

($1 = 1,218.1800 gained)

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