'The Power of Semiconductors' Samsung Electronics Sets New Record with 279 Trillion KRW Sales Last Year (Comprehensive)

Samsung Electronics achieved a record high performance with annual sales exceeding 279 trillion won. On the 7th, Samsung Electronics announced that its preliminary consolidated results for last year showed sales of 279.04 trillion won and an operating profit of 51.57 trillion won. The Samsung flag is fluttering in the wind in front of Samsung Electronics' Seocho building on this day. Photo by Mun Ho-nam munonam@

[Asia Economy Reporters Hyewon Kim, Hyunjin Jung, Eunmo Koo] Samsung Electronics set a record for the highest-ever annual sales last year, reaching 279 trillion KRW. Operating profit ranked third highest in history. On the 7th, Samsung Electronics announced that its consolidated financial statements showed a provisional sales figure of 279.04 trillion KRW, a 17.83% increase from the previous year. This is the highest sales figure since the company's founding.

Samsung Electronics' record-breaking sales last year were largely driven by semiconductors. Although the year began with high expectations for a semiconductor supercycle, concerns grew in the second half about a 'winter' due to a sudden downturn in the memory semiconductor market. However, overall semiconductor demand remained solid, and the decline in the memory market was more limited than expected, resulting in minimal damage. Strong sales in the mobile and consumer electronics set divisions also contributed to the record performance.

This year, memory semiconductors are expected to see market improvements in the second half, and foundry (semiconductor contract manufacturing) prices are anticipated to rise, boosting both sales and profitability. With economic recovery expected to increase demand in mobile and home appliances, optimistic forecasts suggest Samsung Electronics could surpass the 300 trillion KRW sales mark from the start of the year.

Samsung Electronics Achieves Record High Sales of 279 Trillion KRW Last Year

Operating profit last year increased by 43.29% to 51.57 trillion KRW. This ranks as the third highest ever, following the semiconductor boom years of 2017 (53.6 trillion KRW) and 2018 (58.89 trillion KRW). Fourth-quarter sales and operating profit were 76 trillion KRW and 13.8 trillion KRW, respectively. Sales rose 2.73% from the previous quarter, setting a new quarterly record. Operating profit fell 12.77% quarter-on-quarter due to a one-time special incentive payment. Samsung Electronics issued special incentives for the first time in eight years at the end of last year.

Although business segment results were not disclosed that day, analysts attribute Samsung Electronics' record sales primarily to semiconductors. Industry estimates suggest that Samsung Electronics generated sales of approximately 94 to 95 trillion KRW from its semiconductor business alone last year. Samsung Electronics surpassed Intel last year to reclaim the top spot in global semiconductor sales for the first time in three years.

Market conditions last year were characterized as 'strong first half, weak second half.' Despite concerns about a 'memory winter' as the semiconductor market weakened in the second half, price declines were limited. Increased IT investments by companies supported demand for data center servers' DRAM, and strong performance was also seen in set divisions such as foldable phones and TVs. Securities firms are closely watching whether Samsung Electronics will break the 300 trillion KRW sales milestone this year, with operating profit forecasts ranging from 56 to 57 trillion KRW.

Semiconductor Sales Reach All-Time High... Vigilance Over Market Changes

Samsung Electronics did not separately disclose segment results that day, but securities analysts estimate that the semiconductor division alone posted sales in the high 26 trillion KRW range and operating profit in the mid-9 trillion KRW range in the fourth quarter. Semiconductor sales surpassed the previous quarterly record set in the third quarter, and operating profit is estimated to have significantly exceeded that of the first and second quarters. This was driven by increased IT investments and rising demand for servers in data centers, boosting server DRAM demand. Based on this, annual semiconductor sales for last year are estimated at around 95 trillion KRW, with operating profit near 30 trillion KRW, far exceeding the 2018 annual semiconductor sales of 86.3 trillion KRW during the supercycle period.

Samsung Electronics has closely monitored changes in the memory semiconductor market, its core business, throughout last year. Early in the year, it expected the semiconductor shortage to continue and strong memory semiconductor demand to sustain a rising trend throughout the year, but the situation reversed in the second half. For example, the fixed transaction price of DDR4 8Gb 1Gx8 2133MHz PC DRAM rose 33% in the first half compared to the end of the previous year but dropped more than 9% in October, the first month of the fourth quarter. Nevertheless, the price decline in memory semiconductors in the second half was less severe than expected, and demand for server semiconductors remained high. Based on this, Samsung Electronics reclaimed the global semiconductor No. 1 position from Intel last year after three years.

Semiconductor Boom Expected to Continue This Year... Approaching 300 Trillion KRW Sales

The semiconductor industry, which determines Samsung Electronics' performance, is expected to remain strong this year. The memory semiconductor market, which has been in a downcycle since the second half of last year, is anticipated to recover sooner than expected, possibly as early as the second quarter or by the second half at the latest. Securities firms have recently revised their forecasts for DRAM and NAND flash price declines downward from the initial 10% range to single digits. Additionally, Samsung Electronics' expanding foundry business is benefiting from global semiconductor shortages, leading to continued price increases, which is expected to drive both sales growth and profitability improvements.

Won-sik Lee, a researcher at Korea Investment & Securities, said, "We have raised our annual memory segment sales estimate for Samsung Electronics this year to 89.2 trillion KRW and operating profit estimate to 34.1 trillion KRW, up 8% and 22%, respectively. As set production improves and front-end companies reduce inventory of memory products, recent lockdown measures in China's Xi'an region have caused supply disruptions for both DRAM and NAND, creating a more favorable price negotiation environment for Samsung Electronics."

Samsung Electronics plans to continue expanding its business competitiveness through large-scale investments in the semiconductor sector this year as well. The third semiconductor production line, 'P3,' at the Pyeongtaek campus is scheduled for completion in the second half of this year, with preparations underway for the fourth line, 'P4.' Additionally, construction of the second foundry plant in the United States, announced last year, is planned to begin in the first half of this year.

Strong Sales in Sets Including Foldable Phones and TVs

Another key driver of Samsung Electronics' strong performance last year was foldable phones. The high-priced third-generation foldable phones, 'Galaxy Z Fold3' and 'Galaxy Z Flip3,' released in August last year, are estimated to have sold about 8 million units, surpassing the total foldable phone sales of 2020 within about a month of launch.

Samsung Electronics achieved a record high performance with annual sales exceeding 279 trillion won. On the 7th, Samsung Electronics announced that its preliminary consolidated results for last year showed sales of 279.04 trillion won and an operating profit of 51.57 trillion won. Citizens are coming and going at the Samsung Electronics Delight Shop on this day. Photo by Moon Honam munonam@

The IT & Mobile (IM) division, responsible for the smartphone business, is estimated to have posted sales and operating profit of approximately 107 trillion KRW and 14 trillion KRW, respectively, last year. In the fourth quarter, operating profit is expected to be between 2.9 trillion and 3.1 trillion KRW, lower than the previous quarter's 3.361 trillion KRW but improved compared to the same period last year (2.42 trillion KRW). Although shipments were initially expected to decline quarter-on-quarter due to parts shortages, improved parts supply led to a slight increase in shipments compared to the third quarter, contributing to better results. Kangho Park, a researcher at Daishin Securities, explained, "Performance improvement exceeding market growth rates is expected again this year."

The consumer electronics division (formerly CE division) is estimated to have achieved sales of 55 trillion KRW and operating profit of 3.7 trillion KRW last year, driven by strong sales of flagship Neo QLED TVs, premium TV products, and the Bespoke home appliance series. Samsung Electronics maintained its No. 1 market share in the TV market last year, holding the top position for 16 consecutive years since 2006.

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