Samsung Electronics Posts Record Quarterly Revenue of 76.57 Trillion Won

Samsung Electronics Vice Chairman Lee Jay-yong. (Photos: Samsung Electronics)

Samsung Electronics reported financial results for the fourth quarter and the fiscal year 2021 on Jan. 27.

Samsung Electronics posted 76.57 trillion won in consolidated revenue, a quarterly record, and 13.87 trillion won in operating profit in the quarter ended Dec. 31, 2021.

For the full year, the company reported 279.6 trillion won in revenue, another record high, and 51.63 trillion won in operating profit.

The fourth quarter revenue growth was driven mainly by the finished product businesses, with expanded sales of premium smartphones, including foldable phones, as well as TVs and home appliances.

Operating profit declined from the previous quarter due to a special bonus payment to employees, but rose from a year earlier, driven by the semiconductor businesses.

Earnings at the Memory Business decreased from the prior quarter as prices fell, and some growth came in below the Samsung Electronics’ guidance.

The Foundry Business posted a new record for quarterly revenue, while profitability decreased slightly from the previous quarter due to a rise in costs related to ramping up advanced process nodes.

The Display Panel Business saw earnings continue to improve for mobile panels, while losses in large panels widened due to price declines in LCDs and costs related to QD displays.

Revenue of the Mobile eXperience (MX) Business increased slightly led by sales of premium products such as foldable phones and Device Ecosystem products, while profit declined quarter-on-quarter as marketing expenses increased.

The Networks Business results improved from the prior quarter as revenue grew for both domestic and global businesses.

The CE businesses posted record quarterly revenue due to robust sales of premium products, but profit declined slightly quarter-on-quarter amid rising costs.

The strength in the U.S. dollar against the Korean won offset the weakness in major emerging currencies, leading to a positive impact of approximately 300 billion won on operating profit compared to the previous quarter.

In the first quarter of this year, the Memory Business will focus on maximizing the quality of the business portfolio via higher sales of advanced node products to support the server and PC demand recovery, although lingering uncertainties are likely to persist.

The System LSI Business will look to supply essential SoCs and CISs for key customers’ flagship products, while the Foundry Business will seek to expand supply by improving production and yield at advanced processes.

In the Display Panel Business, mobile displays are expected to deliver improved results year-on-year, driven by new smartphone releases and an expansion of the foldable display customer base. In large panels, losses are likely to be partially mitigated with the mass production of QD displays.

The MX Business is expected to deliver revenue and profit growth despite supply constraints, led by new flagship model releases and higher sales of mass market 5G smartphones as well as tablets and wearables.

For the Networks Business, Samsung Electronics aims to win new opportunities from European and other global customers.

The Visual Display and Digital Appliances businesses will seek to improve profitability by focusing on sales of premium products and expansion of new-category products and the portion of online sales.

In 2022, amid expectations of a recovery in global IT demand, the Samsung Electronics’ component businesses will increase production of advanced processes and enhance leadership in next-generation products and technology.

In the finished product businesses, Samsung Electronics will strengthen the premium segment lineup and create new user experiences by enhancing connectivity and synergies between devices. However, challenges associated with supply issues and COVID-19 are likely to persist.

In the Memory Business, demand is expected to grow as enterprises ramp up IT investments while Samsung Electronics will expand supply of high-performance products and increase application of industry-leading EUV technology to solidify the cost competiveness and market leadership.

The System LSI Business will reinforce the lineup of SoCs and the Foundry Business aims to outpace market growth by extending technology leadership with mass production of the 1st generation GAA process.

For the Display Panel Business, demand for OLED is expected to increase with the higher penetration of 5G and growth of the foldable market.

For large panels, Samsung Electronics will work to secure technology leadership in the premium segment with QD displays while closing the LCD production line as planned.

The MX Business aims to increase market share by focusing on innovations in flagship products and providing a differentiated user experience.

The Company will also expand sales of Device Ecosystem products by enhancing the value delivered to customers.

For the Networks Business, Samsung Electronics will focus on capturing demand for 5G networks and winning new global customers.

For Visual Display and Digital Appliances, Samsung Electronics will further solidify market leadership and seek growth by continuing to expand sales of premium products, such as Neo QLED and Bespoke, and by strengthening sales of Lifestyle TVs and new home appliance products.

Samsung Electronics’ capital expenditures in 2021 reached a total of 48.2 trillion won, including 43.6 trillion won for semiconductors and 2.6 trillion won for displays.

Spending on memory was concentrated on capacity expansions and process migrations at fabs in Pyeongtaek and Xi’an to address the demand for advanced nodes, including EUV-based 15-nanometer DRAM and 6th generation V-NAND.

Foundry expenditures were focused on capacity expansions for 5-nanometer EUV nodes. For displays, investments were centered on mobile modules and QD displays.

President Roh Tae-moon, head of Samsung Electronics MX Business, introduces “Galaxy S22 Ultra” at the online Samsung Galaxy Unpacked 2022 on Feb. 10.

Semiconductor, Led by Server Sales, Foundry Businesses Post Highest-Ever Revenue

The semiconductor business posted 26.01 trillion won in consolidated revenue and 8.84 trillion won in operating profit in the fourth quarter.

Overall demand in the Memory Business, centered on servers, was solid but earnings declined quarter-on-quarter due to a continuation of global supply chain issues and a slight drop in ASP.

Considering the inventory levels and the market outlook, Samsung refrained from pushing aggressively to expand sales and, as a result, came in below initial bit growth guidance.

However, the Company continued to strengthen competitiveness by increasing its cutting-edge portion of processes.

For DRAM, impacts on set production from global supply chain issues were felt throughout all applications, while server demand remained strong thanks to an increase in DRAM content-per-box on increased adoption of high-core CPUs.

Graphics cards shortage in supply remained due to the strong demand for gaming PCs, along with rising demand for crypto mining. Based on preemptive product-mix adjustments, Samsung actively addressed an increase in server and graphic demand.

For NAND, demand for server SSD from major data center customers was robust, but there were some market effects related to disruptions in the IC component supply chain.

Demand for client SSD was somewhat stagnant because of inventory adjustment by some customers and manufacturing disruptions caused by component shortage.

Samsung focused on optimizing sales considering various factors including its inventory situation, while identifying impacts on production caused by changes in line operation due to the lockdown in Xi’an.

Looking to the first quarter, while risks, such as the spread of a COVID variant, need to be monitored, the Memory Business will concentrate on enhancing the balance of its portfolio, including through increased sales of cutting-edge, high-value products to support the server/PC demand and also by actively addressing demand from all applications.

For DRAM, server demand remains strong thanks to the high-density trend alongside increased investments centering on data centers, while the high-core CPU portion continues to increase. Mobile demand is solid as major manufacturers launch products based on new form factors and increase the portion of LPDDR5.

For NAND, server SSD demand is expected to be robust thanks to continuing investments, mainly in data centers. PC demand will recover, mainly for laptops, along with gradual improvements in component shortage.

And for mobile, despite being amid slow seasonality, Samsung expects the high-density trend for storage to persist as manufacturers launch new 5G models.

In 2022, the Memory Business expects server demand to grow, attributed to increase in IT investments and new high-core CPUs, while 5G lineup expansion is likely to increase content-per-box for mobile, although challenges related to supply issues and COVID-19 are likely to persist.

Therefore, the Company will continue to reinforce its leadership by expanding supply of high-performance products and increasing application of its industry-leading EUV technology.

The System LSI Business reached the highest-ever quarterly sales thanks to increased demand for SoCs, DDIs and PMICs, but profit fell slightly due to the influence of special bonuses.

In the fourth quarter, the Company began supplying the 4-nanometer AMD GPU-powered SoC and expanded adoption for the 108-megapixel image sensors from customers.

In the first quarter, demand is expected to stay strong for OLED DDI, NFC/eSE and PMIC products. Samsung plans to expand supply of GPU and NPU improved SoCs and ultra-high resolution image sensors.

In 2022, the System LSI Business hopes to see its performance grow further by maximizing supply of 5G SoCs for the volume zone and 108- and 200-megapixel sensors.