Samsung Smartphone Operating Profit Surpasses 4 Trillion Won... Early Sales Boost of Galaxy S21

Estimated Smartphone Shipments Reach 75 Million Units
Increase of 11 Million Units Compared to Q1 Last Year

[Asia Economy Reporter Cha Min-young] The smartphone business, including the Galaxy S21, is regarded as the "top contributor" driving Samsung Electronics' surprising first-quarter performance. Samsung Electronics' IM division operating profit for the first quarter of this year is estimated to be around 4.5 trillion KRW. This is thanks to the strong sales of the Galaxy S21, which was released earlier than usual amid the COVID-19 pent-up demand phenomenon, and the affordable Galaxy A series.

According to the securities industry on the 7th, Samsung Electronics' IM division sales for the first quarter of this year are estimated to be around 30 trillion KRW. Operating profit is estimated to be in the 4 trillion KRW range, more than 1.6 times the previous quarter's 2.4 trillion KRW. This contrasts with the IM division's operating profit in the first quarter of last year, which was hit hard by COVID-19 and remained in the 2 trillion KRW range.

Samsung Electronics did not disclose division-specific results on this day. However, the market views that the set division, including smartphones, TVs, and home appliances, compensated for the semiconductor division's performance, which was weaker than expected. In particular, the IM division's operating profit estimate approaches half of the total operating profit consensus (8.9 trillion KRW).

Samsung Electronics' smartphone shipments in the first quarter appear to have met the initially expected 75 million units. This is more than 10 million units higher than the 64 million units in the first quarter of last year, which was severely impacted by COVID-19. The effect of the Galaxy S21, which advanced its launch schedule by more than a month compared to previous years and implemented an aggressive pricing strategy, was significant. The flagship smartphone Galaxy S21 surpassed 1 million units sold on the 26th of last month, just 57 days after its launch. This is about a month faster than its predecessor, the S20. The first-week sales performance from January 29 to February 8 increased by about 30% compared to the same period for the S20.

The two-track strategy with the mid-range affordable Galaxy A series is also seen as contributing to the performance improvement. Samsung Electronics held its first online unpacking event for the Galaxy A series this year, focusing on securing market share in the fiercely competitive global mid-range smartphone market. Additionally, the increase in sales of wearable products such as Galaxy Buds is also analyzed to have influenced the improvement in operating profit.

Kim Un-ho, a researcher at IBK Investment & Securities, evaluated, "Sales increased significantly due to the increase in smartphone volume and the rise in average selling price (ASP)," adding, "Profitability also improved as the product mix and costs improved." Hwang Min-sung, a researcher at Samsung Securities, analyzed, "The smartphone sales volume of about 75 million units in the first quarter is at the expected level, but profitability improved due to cost reduction effects."

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