Quarterly operating profit at KRW 9.38 trillion on sales of KRW 65.39 trillion
Market conditions to improve for components business in second half
Samsung Electronics today reported financial results for the first quarter ended March 31, 2021.
Total consolidated revenue was KRW 65.39 trillion, a 6% increase from the previous quarter and a record for the first quarter. Operating profit increased 4% from the previous three-month period to KRW 9.38 trillion as solid sales of smartphones and consumer electronics outweighed lower earnings from semiconductors and displays.
The semiconductor business saw an earnings decline quarter-on-quarter (QoQ) despite solid memory shipments, mainly due to the production disruption at the Austin fab, and a downward trend in NAND prices, while initial costs of new line ramp-up associated with advanced node migration also weighed on the results. Profit from the Display Panel Business fell quarter-on-quarter because of weak seasonality of mobile products.
Earnings at the Mobile Communications Business rose significantly as sales of flagship and mass-market smartphones increased and contributions of products in the Device Ecosystem such as tablets, PCs and wearables grew. The Networks Business maintained solid performance on the back of continued expansion of 5G globally.
The Consumer Electronics Division reported higher profit both quarter-on-quarter and year-on-year as demand remained strong for digital appliances and premium TVs.
In the second quarter, earnings at the semiconductor business is expected to increase as memory market conditions improve on the back of strong server demand. The Foundry Business has seen a full resumption of production at the Austin fab, while the System LSI Business is expected to continue to be impacted from the previous quarter’s foundry disruption. For displays, mobile panel sales are likely to decline due to weak seasonality for mobile phones and the effects of some component shortages.
The Mobile Communications Business is set to see revenue and profit decrease as flagship smartphone sales fall and some components experience supply issues. The Company plans to minimize the impact from components by leveraging its global supply chain management (SCM) capabilities. The Consumer Electronics Division will focus on bolstering sales of new products such as Neo QLED models and expanding sales of the Bespoke lineup.
For the second half, market conditions are expected to improve for the component business with the Company continuing to extend product and technology leadership. In smartphones and consumer electronics, the Company will focus on strengthening the premium category leadership. However, global macroeconomic risks, including uncertainties over demand related to COVID-19, are likely to persist.
The Memory Business is expected to see solid demand for server and mobile products and the Company will accelerate migration to 15-nano DRAM and 128-layer 6th-generation V-NAND as well as expand application of extreme ultraviolet (EUV) lithography processes. The System LSI Business will maximize supply capabilities by cooperating with foundries at home and abroad, while the Foundry Business will expand supply with mass production at the Pyeongtaek Line 2.
The Display Panel Business will continue to increase adoption of OLED panels and establish a foundation for quantum-dot (QD) displays in large-sized panels.
The Mobile Communications Business plans to post solid profitability by popularizing foldable models, expanding the lineup of mass-market 5G phones and increasing sales of tablets, PCs and wearables. The Networks Business will continue to address demand from growing 5G commercialization globally while the Consumer Electronics Division will seek to secure profitability by expanding sales of premium products.
The Company’s capital expenditures in the first quarter stood at KRW 9.7 trillion, including KRW 8.5 trillion spent on semiconductors and KRW 0.7 trillion on displays.
Semiconductor Earnings Decline, to Improve Significantly in Second Quarter
The semiconductor business posted KRW 19.01 trillion in consolidated revenue and KRW 3.37 trillion in operating profit in the first quarter.
The Memory Business saw a slight profit decline due to a downward trend in NAND prices and initial costs associated with ramping up new lines, despite overall decent demand backed by server and mobile products.
For DRAM, demand for mobile stayed solid despite the weak seasonality due to releases of new models by major customers and increased penetration of 5G smartphones. Demand from PC remained strong as online-based activities became routine for global consumers.
Server demand increased significantly year-on-year, as content-per-box rose due to increasing adoption of a new server CPU and as demand was solid mainly from datacenters. Demand for consumer products was also strong, due to an increase in 4K high-definition content and growth in TV and set-top box memory content to use streaming services.
As for NAND, demand from mobile was robustly supported by strong smartphone sales along with rising demand and content-per-box. Server SSD saw growth in demand compared to the previous quarter thanks to the base effect of weak demand in the previous quarter as major data center companies resumed storage investments.
Looking to the second quarter, the Company expects to improve earnings significantly amid favorable business conditions, which include strong demand across all applications.
DRAM demand is likely to stay robust thanks to the expanding 5G market and related growth in content-per-box and sever demand will continue to be strong backed by solid demand for cloud applications. PC demand will stay solid as educational laptops enter peak seasonality.
For NAND, demand is expected to pick up because of growing content-per-box from expanding 5G line-ups at major customers. Demand for Server SSD is likely to stay strong due to increased storage demand from customers and a high capacity trend with the release of a new CPU. The Company will actively address the increase in demand for high-capacity SSD with 8TB or more, while accelerating migration to the industry’s only single-stack based 128-layer 6th generation 512Gb V-NAND to strengthen technological leadership and cost competitiveness.
For the second half, amid the accelerating economic recovery from persisting stimulus programs in numerous countries, demand for servers and storage will keep growing because of expanding investment in data centers and the high capacity trend with the release of a new CPU. Mobile demand will keep rising with the launch of new models from major customers and the broad penetration of 5G and PC demand will remain strong backed by continuing demand for upgrades and additional units in households.
Based on strong, across-the-board demand, DRAM prices are expected to continue the upward trend through the second half of the year. For NAND in the second half, demand for certain applications is expected to exceed supply due to a controller supply-demand imbalance for solution products.
In addition, 15-nm DRAM and 128-layer 6th Generation V-NAND will drive bit growth and cost competitiveness in the second half, and the Company will continue to strengthen technology competitiveness by applying EUV on multiple layers of the 14-nm DRAM based on industry-leading technology and through the ramping-up production of solution products adopting double-stack based 176-layer 7th generation V-NAND in the second half.
The System LSI Business increased supply of mobile SoCs and image sensors in the first quarter backed by launches of flagship and high-end smartphones, but earnings remained mostly flat QoQ due to impacts of mobile DDI supply issues caused by foundry production disruption. However, the Company reinforced technological leadership by releasing the Exynos 2100, its first premium 5G-integrated mobile processor, as well as a 50-megapixel ISOCELL image sensor with advanced Dual Pixel Pro.
In the second quarter, demand for mobile components is expected to weaken due to a seasonal decline in smartphone demand and continuing effects of the disruption of foundry production in the previous quarter. As for the second half, amid the possibility that the current supply shortages will persist, the Company will maximize its capability to supply chips by strengthening cooperation with the in-house foundry and expanding the use of outsourced foundries.
The Foundry Business saw its earnings decline in the first quarter due to a disruption of production at the Austin fab in the U.S. from a major power outage. However, the Company continued its efforts to strengthen its technological leadership by starting the development of the 2nd generation 3-nm process and completing the development of the 14-nm and 8-nm RF processes to lead the 5G market.
The production line in Austin has been fully normalized in the second quarter. The Company will prepare to expand supply in the second half of the year through the start of mass production at the Pyeongtaek Line 2 and continue to lead technological leadership by reinforcing its differentiated package solutions. In the second half, growth in the foundry market is expected to exceed previous projections due to the acceleration of 5G penetration, a resumption of corporate IT investments, and growing demand from customers securing safety stock. The Company will respond to increasing customer demand through active supply expansions via full operation of the Pyeongtaek Line 2, and will expand its global customer bases and diversify applications.
Display Earnings Improve YoY on Wider OLED Adoption; Demand Expected to Weaken in 2Q
The Display Panel Business posted KRW 6.92 trillion in consolidated revenue and KRW 0.36 trillion in operating profit for the first quarter.
Mobile display earnings declined QoQ because of chip shortages affecting major smartphone customers and weak seasonality. However, earnings improved year-on-year (YoY) as the expanded adoption of OLED displays from flagship to entry-level models drove growth. Large displays saw a drop in earnings due to ongoing conversion of manufacturing lines in preparation for the next generation TVs.
Looking ahead to the second quarter, Samsung expects weak demand for mobile displays compared to the previous quarter because of the seasonal impact and as consumers hold off buying new smartphone models until later in the year. The Company aims to raise utilization rate and secure profitability by advancing the production. For large displays, it will continue to smooth the way for the transition to new business model based on QD display technology.
In the second half, the smartphone market is forecast to continue its recovery thanks to the growing demand for 5G smartphones. The Company will strive to have panel components secured and technology development completed in time to deliver panels in a stable manner for major customers.
In particular, demand for foldable phones and other IT devices is expected to continue to grow in the post-pandemic era. The Company will focus on addressing such demand and exploring new applications such as automotive to strengthen its leadership in the OLED market. For large displays, Samsung will channel all its efforts towards preparing for the mass production of QD displays, the next generation panel technology.
Mobile Profitability Strengthens in 1Q; To Strengthen Leadership in Premium Segment
The IT & Mobile Communications Division posted KRW 29.21 trillion in consolidated revenue and KRW 4.39 trillion in operating profit for the first quarter.
While market demand decreased QoQ amid weak seasonality, the Company saw overall demand recovering from a year earlier when the market was significantly impacted by COVID-19. The Mobile Communications Business saw material growth in both revenue and profits from the previous quarter. Flagship smartphone sales increased QoQ underpinned by the launch of Galaxy S21, as well as mass-market models such as Galaxy A-Series maintaining solid sales performance. Device Ecosystem products including tablet, PC and wearables also contributed to the profit growth in the first quarter.
Looking ahead to the second quarter, sales of new Galaxy A products such as A72 and A52 are expected to ramp up and tablets, wearables and Galaxy Book – a newly-introduced notebook PC – are expected to remain solid. However, diminishing new product effects for the flagship model and the component supply shortages are likely to weaken revenue of the Mobile Communications Business QoQ. By rebalancing supply with its global SCM capabilities, the Company will minimize the business impact and strive to secure profitability.
For the second half, market demand is forecast to recover to the pre-COVID level on an annual basis backed by a gradual economic recovery and continued expansion of the 5G market. The Company will strive to achieve solid profits and strengthen its leadership in the premium segment by popularizing the foldable category, while also enhancing competitive mass-market 5G lineup and further growing its tablet, PC and wearable businesses.
As for the Network Business, sales in the first quarter increased QoQ with robust profitability mainly led by business growth in North America and Japan. The Company will continue with its 5G equipment expansion in Korea and network rollouts in overseas market including North America and Southwest Asia. The Company will remain active in commercializing 5G network globally while exploring new business opportunities.
Strong Earnings for TVs and Appliances as Stay-at-Home Demand Continues
The Consumer Electronics Division, comprised of the Visual Display and Digital Appliances businesses, recorded KRW 12.99 trillion in consolidated revenue and KRW 1.12 trillion in operating profit in the first quarter.
Demand for TVs declined QoQ following the year-end peak in the previous quarter, but increased YoY due to sustained demand in advanced markets. The Company posted both stronger sales and profit YoY as it leveraged its global SCM capabilities to swiftly respond to heightened demand. It also saw increased sales of its premium products, including strong initial sales of the new Neo QLED lineup.
In the second quarter, the Company expects TV demand to increase YoY with major sporting events including the UEFA Euro 2020 and the Summer Olympic Games expected to take place. However, risks persist around COVID-19 as new surges across the globe lead to additional lockdown measures. The Company will aim to increase profitability by focusing on sales of its Neo QLEDs, responding to strong demand for home entertainment products, and successfully launching its new Micro LED products for home.
In the second half, a switch of demand from home entertainment to outdoor activities is expected as more countries reach herd immunity, resulting in weaker demand for TVs. The Company will closely monitor market conditions and respond in a flexible manner, while continuing its focus on sales of premium and lifestyle product categories.
Demand remained strong in the first quarter for the Digital Appliances Business, despite traditionally weak seasonality. Earnings rose due to strong sales of premium products such as customizable Bespoke refrigerators, as increased time at home led to stronger interest in home appliances and interior design.
While demand is expected to stay strong in the second quarter, rising material and logistics costs are expected to pose a risk. The Company plans to respond by focusing on the expansion of its Bespoke Home platform, introducing new product categories and expanding into additional markets.
Uncertainties are expected to continue in the second half for the digital appliance market. The Company will continue to focus on the global expansion of its Bespoke lineup while further strengthening its online and B2B sales capabilities.
The Link LonkApril 29, 2021 at 06:54AM
https://ift.tt/3sWAg9e
Samsung Electronics Announces First Quarter 2021 Results - Samsung Global Newsroom
https://ift.tt/2O3clnm
Samsung
No comments:
Post a Comment