Samsung Elec to keep capex "flexible" upon returning to No. 1 in chipmaking

[Photo by MK DB]

South Korea’s Samsung Electronics Co. returning to global No.1 in chipmaking by edging Intel Corp. with record sales of 94 trillion won ($78.2 billion) from chips will keep investment “flexible” this year after 25 percent increase last year as it expects increased demand regardless of market uncertainties.

“We are currently reviewing investment plans in chip sector for this year as various uncertainties remain,” the company said during a conference call on Thursday.

Samsung Electronics noted that it will stick to “flexible” investment depending on market conditions.

The company’s capital expenditures for 2021 reached 48.2 trillion won, up 9.7 trillion won or 25 percent from 38.5 trillion won in the previous year. A total 43.6 trillion won was spent on semiconductors and 2.6 trillion won for displays.

In its finalized earnings report for the fourth quarter and full year on Thursday, Samsung Electronics said it raised 51.6 trillion won in consolidated operating profit in 2021, up 43.45 percent from a year ago, on record sales of 279.6 trillion won, up 18.07 percent. Its operating profit was the third largest after 58.8 trillion won in 2018 and 53.7 trillion won in 2017 during chip super cycle.

Shares of Samsung Electronics finished 2.73 percent at 71,300 won on Thursday.

In the final quarter, Samsung Electronics’ operating profit reached 13.87 trillion won, up 53.28 percent on year but down 12.33 percent on quarter. Sales reached a quarterly record 76.57 trillion won, up 24.39 percent on year and 3.5 percent on quarter.

Net profit was 10.8 trillion won, up 64.04 percent on year but down 11.84 percent on quarter.

Robust performance in 2021 was led by its chip business.

Samsung Electronics’ semiconductor business posted 94.2 trillion won in revenue last year, outstripping Intel that announced $79.02 billion in revenue for 2021. The company briefly ascended to No. 1 in 2018 but yielded the spot to Intel in the following two years.

In the October-December period, Samsung Electronics’ chip business raised 8.8 trillion won in operating profit on sales of 26.01 trillion won.

The company said overall demand in memory business was solid, but on-quarter earnings declined due to global supply chain issues and softening in average selling price (ASP).

Samsung Electronics said it will carry out efforts to increase sales of cutting-edge, high-value products in memory business in the first quarter. It expected memory business in 2022 to grow on the back of increased IT investments.

[Graphics by Song Ji-yoon]

The mobile device and equipment business posted 2.66 trillion won in operating income for the fourth quarter on sales of 28.95 trillion won. Sales increased slightly on strong sales of PCs, tablets, and wearable devices and premium foldable smartphones.

The consumer electronics business recorded 700 billion won in operating income on sales of 15.35 trillion won in the fourth quarter. Its visual display business raised strong sales from premium products but operating profit fell slightly on quarter due to rising costs including for logistics.

The company expects to keep up strong earnings this year on expectations for improvement in chip prices and growth in system chip business.

Brokerage industry anticipates Samsung Electronics to raise over 58 trillion won in operating income and 300 trillion won in sales this year.

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