Samsung Electronics Earned 36 Trillion Won in Operating Profit Despite COVID-19 Challenges

[Asia Economy Reporter Kim Hyewon] Samsung Electronics posted solid earnings last year, with operating profit approaching 36 trillion won, despite the challenges posed by the COVID-19 pandemic. The surge in demand driven by the non-face-to-face (untact) economy, pent-up demand, and 'stay-at-home' trends boosted not only its core semiconductor business but also its smartphone and home appliance set businesses.

Samsung Electronics announced on the 8th that its consolidated annual operating profit for last year was preliminarily estimated at 35.95 trillion won, a 29.46% increase compared to the previous year. ▶Related article page 3

During the same period, sales reached 236.26 trillion won, up 2.54% from the previous year. This marks the third-largest figure in history, following 2017 (239.58 trillion won) and 2018 (243.77 trillion won). Overall sales performance last year was similar to that of 2019, but profitability improved significantly due to rising semiconductor prices and reduced marketing expenses.

Looking at the fourth quarter alone, operating profit was 9 trillion won and sales were 61 trillion won, up 25.7% and 1.87% respectively from the same period last year. However, compared to the previous quarter (Q3 2020), which recorded an 'earnings surprise,' operating profit fell 27.13% and sales dropped 8.9%, indicating a slowdown in performance.

The decline appears to be due to a combination of factors including falling prices of memory semiconductors such as server DRAM, a sharp drop in the won-dollar exchange rate, and decreased smartphone sales. Securities firms estimate that in Q4 last year, Samsung Electronics’ operating profit was approximately 4.3 trillion won from semiconductors, 800 billion to 900 billion won from the Consumer Electronics (CE) division, and 2.3 trillion to 2.4 trillion won from the IT & Mobile (IM) division.

The outlook for this year is rosy from the start. There is growing attention on the possibility of a semiconductor 'super cycle' driven by rising DRAM prices, potentially replicating the peak operating profits of 53.7 trillion to 58.9 trillion won seen during the boom years of 2017-2018.

In particular, the system semiconductor (non-memory) business, centered on the rapidly growing foundry (semiconductor contract manufacturing) sector, is expected to achieve sales of 20 trillion won for the first time in history.

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