Samsung Electronics Q1 Operating Profit 6.4 Trillion Won 'Sustained by Semiconductors' (Update)

[Asia Economy Reporter Changhwan Lee] Samsung Electronics announced on the 29th that it recorded sales of KRW 55.3252 trillion and an operating profit of KRW 6.4473 trillion in the first quarter.

Compared to the same period last year, sales increased by 5.61%, and operating profit rose by 3.43%.

By business division, DS (semiconductors, displays, etc.) posted sales of KRW 24.13 trillion and an operating profit of KRW 3.72 trillion, up 17% and 5% respectively from the previous year.

In memory, profits improved quarter-on-quarter due to steady demand centered on servers and PCs as well as continued mobile demand, while system semiconductors saw profit growth due to expanded supply of mobile components to major customers.

The Display (DP) division recorded an operating loss of KRW 290 billion due to seasonal factors. Although profits from small and medium-sized panels decreased compared to the previous quarter, losses from large panels narrowed somewhat due to a slowdown in price declines.

The IM (smartphone) division recorded sales of KRW 26 trillion and an operating profit of KRW 2.65 trillion. Sales decreased by 4% year-on-year, but operating profit increased by 14.3% (KRW 380 billion).

Despite a decline in sales volume at the end of the quarter due to the global spread of COVID-19, the company stated that profits increased compared to the previous quarter and the same period last year due to improved product mix from flagship launches such as the S20 and efficient marketing expenditure.

The CE (consumer electronics) division recorded sales of KRW 10.3 trillion and an operating profit of KRW 450 billion. Sales decreased by 6% and operating profit by 13% compared to the previous year.

Performance declined due to seasonal factors and the impact of COVID-19. The Harman division was significantly affected by one-time costs related to the relocation of factories in Europe, resulting in a decline in performance compared to the previous quarter.

Regarding the exchange rate impact in the first quarter, Samsung Electronics explained that the strengthening of the dollar and euro had a positive effect mainly on the components business, but the weakening of major growth market currencies against the Korean won resulted in a minimal overall exchange rate impact on operating profit.

For the second quarter, the company expects a decline in performance compared to the previous quarter as the impact of COVID-19 on demand for major products intensifies. In the components business, memory is expected to maintain steady demand for servers and PCs, but there are concerns about a slowdown in mobile demand. OLED (organic light-emitting diode) is forecasted to weaken due to the smartphone market downturn.

The set business is expected to see a significant drop in sales volume and performance of major products due to demand contraction caused by COVID-19, store closures, and factory shutdowns.

Harman is expected to continue to experience weak performance amid temporary shutdowns of global automobile factories.

The company anticipates that high uncertainty related to COVID-19 will persist in the second half of the year. In the components business, memory plans to strengthen technological leadership and cost competitiveness through transition to finer processes, while OLED will actively respond to new product demand and pursue expansion into new applications.

In the set business, the company plans to continue preparing innovative products that will enhance consumer experience to the next level. In wireless, it will actively strengthen its lineup with new foldable and Note products as well as expanded mid-to-low-end 5G models, and in networks, it will focus on enhancing technology and global capabilities to strengthen its 5G business.

The CE division plans to implement efficient marketing and promotions considering market conditions by country.

Capital expenditure in the first quarter was approximately KRW 7.3 trillion, with KRW 6 trillion for semiconductors and KRW 800 billion for displays. Memory continues to invest in expansion and process transitions as planned, and foundry investments were focused on expansion to meet demand for EUV (extreme ultraviolet) fine processes.

This content was produced with the assistance of AI translation services.