Samsung posts record chip profit, but net earnings miss forecasts

what happened

Samsung Electronics, according to Dow Jones Newswires, reported a fourth successive quarter of record earnings, driven by its chip division as artificial intelligence demand stayed strong. The company said quarterly operating profit passed 100 trillion won, or $74.52 billion, which it described as a first for a major global tech firm. Revenue reached a record 195.253 trillion won and operating profit hit 107.441 trillion won, while net profit of 75.136 trillion won came in below the 86.13 trillion won average forecast from analysts polled by FactSet.

The chip unit earned roughly 106.5 trillion won, accounting for most of the group's operating income. Management expects memory supply to stay tight for several years, which should keep chip prices high. The smartphone and home-appliance businesses posted small operating losses as higher component costs cut into their margins. Shares fell 2.5% in early trading on Thursday, though they have more than doubled over the past year.

why it matters

Samsung is a key bellwether for the memory chip market, so its view that supply will stay constrained and prices will stay elevated matters to chipmakers and to electronics makers that buy those components. The net profit miss explains the share decline even though the headline operating figures were strong.

market impact

Memory chips: tight supply supports prices; Samsung shares slipped after the net profit miss.

• ▲Memory chip prices pressure up — the company expects tight supply to persist for several years
• ▼Samsung Electronics shares pressure down — net profit fell below FactSet consensus despite record operating profit

tags

instruments