Samsung electronics Q1 profit tops market expectations

Samsung Electronics Co Ltd reported that an estimated 50% jump in quarterly operating earnings to post its highest first-quarter profit since 2018. This beats up the expectations as solid demand underpinned prices for memory chips. Earnings at the world’s largest memory chip and smartphone maker were also supported by brisk smartphone sales in the quarter. They said that this is along with a disruption at a rival NAND Flash chip plant.

Samsung put its first-quarter profit at 14.1 trillion won in a preliminary earnings release, versus a Refinitiv SmartEstimate of 13.3 trillion won. Revenue likely rose 18% from the same period a year earlier to a record 77 trillion won. Park Sung-soon, analyst at Cape Investment & Securities stated that the guidance beat market expectations, probably due to memory chip shipments and prices being better than expected.

Although memory chip prices dipped in the first quarter. There is also limited capacity expansion buoyed Samsung’s chip earnings. And this makes up about half of its total profits. The chipmaker also likely benefited from a disruption at a rival NAND Flash chip plant owned by Japan’s Kioxia and American firm Western Digital. Park said that after the contamination issue at Kioxia, he thinks that there were rush orders for NAND Flash chips made to Samsung for products that were meant to be secured from Kioxia. The disruption at the Kioxia plant is expected to drive up NAND Flash prices by 5%-10%.

Samsung shipped an estimated 72 million smartphones in the first quarter, Counterpoint Research said. According to Sujeong Lim, an associate director at Counterpoint, the Galaxy S22 series globally sold some 50% more in the first week after its launch than its previous model S21. By March end, Lim said that the Samsung is estimated to have shipped slightly over 6 million units of the S22 series. Samsung is due to release detailed earnings on April 28, when investors will be interested to hear any comments on its M&A plans, how it plans to operate its memory chip business to boost profitability, and chip demand outlook. Samsung shares fell 0.2% in morning trade.