Home Finance Samsung Elec sees component shortages persisting in H2, solid server chip demand

Samsung Elec sees component shortages persisting in H2, solid server chip demand

by Enochadmin
  • Experiences document quarterly server chip gross sales in Q1
  • Smartphone market to proceed to develop in H2
  • To extend portion of cutting-edge chip merchandise

SEOUL, April 28 (Reuters) – Samsung Electronics Co Ltd (005930.KS) mentioned on Thursday it expects agency knowledge centre demand for high-margin reminiscence chips to proceed within the second half, however warned element shortages will doubtless persist as nicely.

The world’s prime reminiscence chip and smartphone maker mentioned underlying server chip demand seems “comparatively strong” as corporations increase investments and look to new applied sciences to extend their enterprise.

“Corporations are actually increasing IT infrastructure, and cloud corporations are increasing investments to discover new development areas like synthetic intelligence and machine studying,” mentioned Han Jin-man, govt vp of Samsung’s reminiscence chip enterprise throughout an earnings name.

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“Nonetheless, there are nonetheless some components provide points, which might result in disruptions. We’ll monitor demand fluctuations very carefully and intend to supply provide that matches the demand,” he mentioned.

Samsung forecast weaker demand for cell phone and private laptop chips in Q2 as shoppers climate points resembling rising inflation and COVID-19 lockdowns, however company PC demand is predicted to stay strong, whereas extra 5G-capable cellphone rollouts within the second half might raise cellular demand.

Reminiscence chip rival SK Hynix (000660.KS) supplied the same outlook on Wednesday. learn extra

Analysts mentioned Samsung’s latest give attention to promoting extra high-margin reminiscence merchandise to prioritise profitability over quantity would in the end restrict shipments and assist increase DRAM costs later within the yr, as would the restricted will increase in chip manufacturing capability as a consequence of supply delays in chipmaking gear.

Within the chip contract manufacturing enterprise which counts Qualcomm (QCOM.O) and Nvidia (NVDA.O) as shoppers, Samsung mentioned its order ebook for the following 5 years was eight instances its 2021 income.

It plans to win extra top-tier prospects for chip manufacturing in fields exterior cellphones, resembling excessive efficiency computing, community tools and the automotive trade.

Samsung forecast continued development within the smartphone market within the second half regardless of element shortages, and anticipated the foldable cellphone market to double in measurement from the earlier yr.

The South Korean big confirmed a 51% rise in working revenue to 14.1 trillion gained ($11.1 billion) for the quarter ended March 31, consistent with its earlier forecast. It was the corporate’s highest first-quarter revenue since 2018.

Nonetheless, Samsung shares traded down 0.6% on Thursday, in contrast with a 0.7% rise within the wider market (.KS11), extending a year-to-date fall of 17%.

“Samsung’s inventory worth is a market difficulty, reasonably than a difficulty arising from the corporate,” mentioned Park Sung-soon, analyst at Cape Funding & Securities.

“Prior to now, when the reminiscence chip trade was very cyclical, there was excessive visibility in demand, so funding was attractively predictable. However now there are all these macro points and low demand visibility.”

Earnings at its chip enterprise rose to eight.45 trillion gained, greater than double the three.36 trillion gained a yr earlier, fueled by document gross sales of server chips within the quarter.

Earnings on the cellular and community enterprise got here in at 3.8 trillion gained within the first quarter, down 13% from a yr in the past. Gross sales had been supported by ramped-up manufacturing of the mid-to-low-end Galaxy A collection and the launch of Samsung’s flagship Galaxy S22 collection, mentioned Canalys analyst Sanyam Chaurasia.

Total income rose 19% to a document 77.8 trillion gained.

($1 = 1,271.3900 gained)

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Reporting by Joyce Lee and Heekyong Yang; enhancing by Richard Pullin

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