Record profit expected for Samsung, despite headwinds
Seoul — Samsung Electronics is expected on Tuesday to forecast a record quarterly profit in the fourth quarter, as a world hungry for processing power and hi-tech smartphones snaps up its semiconductors and screens.
While a stronger won and falling NAND chip prices could take some shine off the performance, most analysts are tipping a strong quarter for the world’s leading maker of semiconductors, smartphones and televisions.
The South Korean technology giant is expected to forecast a 74% year-on-year jump in operating profit in the October-December period, to 16-trillion won ($15bn), according to a Thomson Reuters survey of 16 analysts.
The company will issue earnings guidance on Tuesday, ahead of full details on its performance later in January.
"Samsung’s fourth-quarter earnings outlook is lower than initially expected, but it’s mainly due to one-off costs. We remain positive as there’s no notable change in DRAM market dynamics," said Lee Soon-hak, analyst at Hanwha Investment & Securities.
Samsung Electronics shares closed at 2.554-million won on Thursday, an 11% drop from its record high of 2.876-million won in early November.
The stock fell sharply in late November after Morgan Stanley forecast that a down-cycle in NAND flash chips had started, ending a prolonged boom.
However, analysts say the continued rise of DRAM chip prices in the fourth quarter has more than made up for that, and many are forecasting DRAM supply to remain tight throughout 2018 as companies expand data centres.
Average prices of server DRAM and mobile DRAM surged 45% and 20% respectively over 2017, with further gains expected in the first quarter, according to DRAMeXchange, part of research provider TrendForce.
Samsung’s display business is seen reporting a quarterly profit of about 1.7-trillion won, up 27% from a year ago, on sales of organic light-emitting diode (OLED) screens for Apple’s iPhone X smartphones as well as Samsung’s own handsets, according to analysts.
The company is expected to have sold a healthy 10-million Galaxy Note 8 phones since sales began in September, despite high-end segment competition with Apple, HMC Investment & Securities analyst Greg Roh said.
Even so, the mobile business is expected to report profit similar to the previous corresponding quarter’s 2.5-trillion won, as marketing costs weighed.
South Korean exporters are struggling with the stronger won, which traded near a three-year high at 1,062.2 to the dollar on Thursday.