Samsung Electronics 1Q Earnings Outlook 'Clear' Despite Austin Cold Wave

Q1 Revenue Expected to Surpass 60 Trillion Won
Resilient Despite Austin Shutdown... Forecasted 9% YoY Growth
Mobile and Home Appliances Play Key Roles
Short-Term Semiconductor Losses Inevitable

[Asia Economy Reporter Su-yeon Woo] Although Samsung Electronics is inevitably facing short-term losses due to the shutdown caused by a power outage at its Austin foundry plant in the United States, it is expected to post solid results in the first quarter of this year. This is because the mobile and home appliance business sectors are expected to drive performance, offsetting the semiconductor sector's downturn.

According to FnGuide on the 15th, Samsung Electronics' consensus forecast for the first quarter of this year predicts sales of KRW 60.3993 trillion and operating profit of KRW 8.5662 trillion. This represents a 9.1% increase in sales and a 32.8% increase in operating profit compared to the same period last year. Most securities firms have reflected the suspension of operations at the Austin plant in their earnings forecasts by lowering profits in the semiconductor sector, but have raised profit estimates for the mobile, IT, home appliance, and display sectors.

In particular, the mobile sector is expected to see smartphone shipments increase by more than 20% quarter-on-quarter in the first quarter due to the launch effect of the latest model, the Galaxy S21, along with an anticipated rise in the average selling price (ASP). Additionally, the home appliance sector, which enjoyed a boom last year due to growth in non-face-to-face demand, is expected to achieve record-high results in the first quarter of this year by strengthening the sales proportion of premium lineups. Dong-won Kim, a researcher at KB Securities, said, "The TV, home appliance, and PC markets are expected to enter a structural growth phase this year, driven not by last year's temporary growth due to non-face-to-face demand but by replacement demand."

In the semiconductor sector, which is inevitably facing short-term losses in the first quarter, a sales loss of KRW 300 billion to 400 billion is expected due to the suspension of operations at the Austin plant. The Austin plant, which had production disruptions due to power issues since February 16, has been shut down for over a month. Although power supply resumed at the end of February and some lines reportedly began operating in early March, it appears more time is needed for full resumption. The industry expects Samsung Electronics to disclose a detailed plan for restarting the Austin plant through a Q&A session with shareholders at the shareholders' meeting scheduled for the 17th.

Meanwhile, semiconductor plants worldwide have halted operations due to natural disasters such as the US cold wave, earthquakes in Japan, and droughts in Taiwan, spreading the impact of semiconductor supply shortages across global manufacturing. Shortages have appeared not only in automotive semiconductors but also in semiconductors for smartphones and PCs, gradually causing production disruptions in finished products. Market research firm TrendForce forecasted that global smartphone production in the second quarter of this year will decrease by 5% year-on-year due to the shutdown of Samsung's Austin plant.

However, the industry expects that the rise in semiconductor prices caused by supply shortages will offset the decline in shipment volumes, maintaining the semiconductor industry's profitability. Recently, foundry and fabless companies such as Taiwan's TSMC and the US's Qualcomm have reportedly raised product prices by 15-20%, and the price of PMICs (power management integrated circuits) used in smartphones and home appliances has already increased by about 20%.

Hyun-woo Do, a researcher at NH Investment & Securities, said, "There are concerns that rising semiconductor prices could negatively impact the overall IT industry by causing manufacturing slowdowns and profitability deterioration for set manufacturers, but in the past, the positive effects of price increases have generally outweighed losses from shipment declines," predicting that the semiconductor industry's profitability will be maintained.

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