Soaring Demand for Displays and Chips Expected to Send Samsung Into Higher Profits

By Avi Ben Ezra Thursday, January 7, 2021

Analysts are expecting Samsung Electronics to report higher-than-expected profits amid a surge in demand for display panels and chips during the second wave of the pandemic.

Market Analysts Expecting a Q4 Beat

Analysts estimate that Samsung’s business profit rose to roughly ₩9.5 trillion ($8.75 billion), up 33% compared to the same period in 2019. According to estimates, Samsung’s revenue climbed by 2.6%.

The South Korean conglomerate is expected to publish the initial Q4 report on Friday. The earnings are set to outstrip analysts’ profit estimates in the previous three quarters.

Samsung’s deliveries of its benchmark chips DRAM and NAND likely climbed about 10% during the September quarter. However, prices of DRAM chips dropped by 9% as a result of weaker demand from server customers who stockpiled chips during the peak of the pandemic.

Chips represent around half of the company’s total profit, while an optimistic outlook for Samsung’s foundry operations has partly driven the 55% surge in its stock since September.

Samsung is the largest chip supplier and the largest smartphone maker globally, with the latter generating the rest of its profit for the business. However, Samsung’s smartphone sales dropped by around 20% in the last quarter, which was partly affected by the launch of Apple’s new iPhone 12.

According to Counterpoint Research, the new iPhone was the best-selling smartphone in October, beating Samsung’s Galaxy Note 20 Ultra, which was the best-selling phone a month earlier.

But the high demand for iPhone 12 has fuelled a surge in sales for Samsung’s OLED panels, and its display division took advantage of a surge in LCD panel prices.

The company is also set to announce its new smartphones on January 14, where it is expected to unveil new Galaxy smartphones. The announcement is set to occur during the digital-only CES 2021, the largest tech event of the year.

While much remains unknown, previous leaks indicated that Samsung could announce three new Galaxy phones — Galaxy S21, S21+, and S21 Ultra.

In December, TM Roh, president and chief of mobile communications business at Samsung, TM Roh, said in a blog post that the company also plans to introduce new foldable smartphones in the future and make them “more accessible to everyone” this year. Samsung’s Galaxy Z Flip currently costs around $1,400.

Summary

The market is expecting Samsung Electronics to report a higher profit for the last quarter of 2020, driven by a surge in demand for display panels and chips.

About the Author


Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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