Samsung Electronics Q1 profit tops market expectations on solid chip demand

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics Co Ltd reported on Thursday an approximated 50% leap in quarterly working earnings to write-up its greatest first-quarter gain due to the fact 2018, beating expectations as strong demand from customers underpinned price ranges for memory chips.

Earnings at the world’s major memory chip and smartphone maker had been also supported by brisk smartphone income in the quarter, alongside with a disruption at a rival NAND Flash chip plant, analysts said.

Samsung set its initial-quarter profit at 14.1 trillion won ($11.6 billion) in a preliminary earnings launch, vs . a Refinitiv SmartEstimate of 13.3 trillion received. Revenue likely rose 18% from the exact same interval a yr before to a record 77 trillion won, also higher than marketplace anticipations.

“The guidance conquer market place expectations, in all probability due to memory chip shipments and costs getting greater than envisioned,” stated Park Sung-shortly, analyst at Cape Investment & Securities.

Despite the fact that memory chip charges dipped in the 1st quarter, analysts explained reliable need from knowledge centre clientele as effectively as cautious expenditure paying by chipmakers and limited ability enlargement buoyed Samsung’s chip earnings, which make up about half of its overall income.

The chipmaker also very likely benefited from a disruption at a rival NAND Flash chip plant owned by Japan’s Kioxia and American company Western Electronic owing to contamination of uncooked resources.

“Right after the contamination challenge at Kioxia, I feel there were hurry orders for NAND Flash chips made to Samsung for merchandise that were meant to be secured from Kioxia,” Park said.

The disruption at the Kioxia plant in early February is envisioned to drive up NAND Flash price ranges by 5%-10%, offsetting the consequences of modestly large inventories maintained by purchasers, info service provider TrendForce claimed.

Samsung delivered an estimated 72 million smartphones in the to start with quarter, Counterpoint Study reported, down some 11% from a 12 months before, mainly due to a afterwards than usual release of its most recent flagship smartphone, the Galaxy S22.

The Galaxy S22 series globally offered some 50% additional in the very first week immediately after its late February start than its past product S21, according to Sujeong Lim, an affiliate director at Counterpoint.

Samsung is estimated to have transported slightly in excess of 6 million models of the S22 sequence by the finish of March, Lim said, adding that sales have been in line with original anticipations.

Samsung is owing to release in-depth earnings on April 28, when investors will be fascinated to listen to any remarks on its M&A strategies, how it ideas to function its memory chip company to increase profitability, and chip need outlook.

Samsung shares fell .2% in morning trade, compared to a .9% drop in the wider industry.

($1 = 1,218.1800 gained)

(Reporting by Joyce Lee and Heekyong Yang modifying by Richard Pullin)

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