Samsung believes that the first quarter of the year it will show a huge increase in its operating profit that will be more than tenfold than their official prediction. Nevertheless, an outlook of 1.3% declining its stock following the chip business failing to keep up with competition rose.

Operating profit soars, shares dip

Samsung projecting its operating profit to reach approximately four billion eight hundred ninety million won ($6,600 billion) in the first quarter, which is around five times higher than the same quarter of the previous year with an operating profit of about six hundred forty billion won ($640 billion), Samsung is on the rise for the first quarter. 

However, this success outperformed the market forecast but disappointed the investors who pulled their shares down making Samsung to have a 1.3% decline in its share position in the market which is the same as the general South Korean market which had a 1.1% drop on the share level. CS missed operating profit but revenue were just 11% more than expected, meaning 71 trillion won and 72.3 trillion won respectively for the year.

Samsung’s chip business emerges the increase in the quarterly profit which will be Samsung’s first quarterly profit after five consecutive quarters of losses. This recovery takes place on the heels of a year from hell for international chip manufacturing when the commodity prices depleted approximately 30% from the market right from mid of 2022. However, as months passed by, the prices of DRAM chips have shown a strong 20% recovery, and the prices of NAND flash chips have reached 23% to 28 % from their beginning points.

Mobile business resilience

The vibrant Samsung Mobile Business domain, the manufacturer is anticipated to report outstanding profit figures strengthened by the mid-January launch of its stunning new-generation Galaxy S24 smartphones. Another analyst figure confirms the average shipments of Samsung smartphones for the quarter was about 57 million, a 8% increment from the preceding quarter. Moreover, on a quarterly basis, the average selling price of Samsung smartphones moved up similar to 30% to $340 from the recently concluded quarter, resulting in a meaningful rise in the profitability of the firm.

Samsungʼs HBM chip business looks legitimate, there is also challenges to face, such as the delay in entering the highest band memory (HBM) market, which it currently is by rivals. Among the major semiconductor firms, the company’s shares have performed poorly against the peers such as SK Hynix, albeit it had delayed the typology entry into the flourishing HBM segment. This notwithstanding, Samsung has a akin scheme place to turn up its marketplace position in the market with the objective of launching its novel HBM chips in the third quarter of that year.

Possibility of the influence of an outer influence

The recent earthquake of 7.2 magnitude in Taiwan is predicted to limit memory chip supply. In this context, analysts suppose that Samsung and SK Hynix are going to increase the price for memories in more significant amounts than at first landing. This scenario is just a way for the companies to do well financially in the second quarter.

Samsung expects great faith in its 1Q operating profit, which is nearly 10 times more than the previous year. The main factor for this boost in earnings is the dramatic rise in the demand for memory chips and strong performance in the mobile business segment. Indeed, in the highly competitive chip market, the company has to face difficulties that require it to deliberate its ways further in order to preserve and raise the company’s market share.

Original Story From https://www.businesslive.co.za/bd/companies/telecoms-and-technology/2024-04-07-samsung-expects-tenfold-jump-in-quarterly-profit/#google_vignette

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