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Tuesday, January 25, 2022

Global chip shortage: Samsung expects its profits to jump by 52%


Technology giant Samsung Electronics has said it expects to post a 52% jump in profit for the last three months of 2021, amid the global chip shortage.

The world’s largest memory chip manufacturer estimates that it earned 13.8 trillion won ($11.5 billion; £8.5 billion) during the period.

That would be the company’s highest fourth-quarter operating profit in the last four years.

Strong demand for server memory chips and higher profit margins in the company’s chip contract manufacturing business boosted earnings.

“Samsung is well positioned to profit from record-breaking demand for PCs and electronics,” said technology analyst Sam Reynolds to the BBC.

He also mentioned how currency fluctuations had benefited the company: “The Korean won continues to depreciate, making Korea’s exports more appealing on the global market.”

The estimated profit, however, was lower than the 15.2 trillion won predicted by many analysts.

Samsung’s spending on employee bonuses and marketing for its smartphone business was cited as one of the reasons for missing the market forecast.

The global shortage of semiconductors has caused major disruptions for manufacturers in recent months, ranging from carmakers having to suspend production to Apple warning that iPhone shipments would be delayed.

Investors are also keeping an eye on the company’s chip manufacturing facility in Xi’an, central China. Due to a coronavirus outbreak, the city has been under lockdown since December 23.

Samsung announced last week that it would “temporarily adjust operations” at its Xi’an facilities, but provided no further details on how the changes might affect microchip production.

Samsung announced in November that it had chosen a site near the US city of Taylor in Texas for its new $17 billion computer chip plant.

The plant is scheduled to open in the second half of 2024. It is the South Korean electronics conglomerate’s largest-ever investment in the United States.

On Friday, Samsung Electronics shares were trading around 1.8 percent higher in Seoul.

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