Samsung recorded 44% increase of its profit in First Quarter 2021

According to CNBC, Samsung recorded strong profit increase in First Quarter 2021.

Samsung Electronics’ first-quarter profit rose by 44% in 2021. This is because the sales of smartphones and TVs soared up at the quarter. However, chip earnings was decreasing due to the storms in the US. January-March operating profit in the South Korean company expectedly became 9.3 trillion won ($8.32 billion).

Samsung’s mobile division likely saw operating profit soar more than 1 trillion won to about 4.15 trillion won. This is because flagship Galaxy S21 smartphone series outsold the previous version by a two-to-one margin in the six weeks. In addition, a lower starting price for the flagship helped sales for the world’s largest smartphone manufacturer during the quarter. In fact, the S21 priced $200 lower than the S20.

Profit in Samsung’s television set and home appliance business also likely be more than doubled to around 1 trillion won. Continued stay-at-home demand attributed to this result.

Increase investments in chips

In Samsung’s chip division, its profit is likely to fall 20% to 3.6 trillion won. This is because the cost of domestic production is increasing, and its Texas plant was trouble in mid-February stoppage. However, the industry itself shows strong demand. Thus, the rising demand may help the chip division increase its revenue in later 2021.

For example, remote working is continuous trend even in 2021. In fact, the price of DRAM chips used in laptops and other computing devices rose 5.3% in January-March from the previous three months. It seems that prices are likely to rise further in the current quarter due to solid demand for servers.

It also seems that Samsung will invest about 10 trillion won ($8.95 billion) in its chip contract manufacturing business in 2021. On the other hand, the number was about 6 trillion won in 2020. In addition, there is the report that Samsung is considering a new $17 billion chip plant in the United States.

Who is Samsung?

The Samsung Group is a South Korean multinational conglomerate and its head office is in Samsung Town, Seoul. It comprises numerous affiliated businesses, most of them united under the Samsung brand. In fact the group is the largest South Korean chaebol (business conglomerate).

Samsung Electronics is a South Korean multinational electronics company and its head office is in the Yeongtong District of Suwon. The company is major part of the Samsung Group. It has five core values: People, Excellence, Change, Integrity and Co-prosperity.

Samsung’s 1Q result showed the direction of industries

Samsung enjoyed its success in the smartphone market. However, there are always both winners and losers. Of course, Apple is a clear winner and realized the strong sales figure in Q4 2020. On the other hand, one of major losers in the market is its South Korean rival, LG. In fact, the company decided to withdraw the smartphone market due to the tight competition.

When it comes to semiconductors, strong storms in the US affected its production. It is possibly time when we should rethink global supply chain. Furthermore, the strong demand of chips is continuing. As a result, some companies including Samsung increase their investments to increase capacity. TSMC’s huge investment is an example, too.

It is better for us to pay continuously attention to the words such as remote work, semiconductors or supply chain in Q2 2021.