Overcame the 'Boritgogae' with Semiconductor and Smartphone 'Double Pull'... Samsung Electronics Records All-Time High Q1 Revenue of 77 Trillion Won (Comprehensive)

Record High Performance in Traditional Off-Season Draws Attention
Strong Q1 Results... Approaching 300 Trillion Won Sales Era
Semiconductor Market Rapidly Recovers... Strong Q2 Performance Expected

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] Samsung Electronics has delivered a 'record-breaking' performance for the first quarter (January to March) of this year, far exceeding market expectations. Despite various adverse factors such as the spread of COVID-19 and global supply chain instability, it recorded sales of 77 trillion won. This is noteworthy as an unprecedented achievement in the first quarter, which is generally considered the 'lean season' in the electronics industry. The faster-than-expected improvement in the semiconductor market and the success of the new flagship smartphone Galaxy S22 series are analyzed as the main reasons.

Samsung Electronics announced on the 7th that its consolidated sales for the first quarter of this year were tentatively estimated at 77 trillion won, with an operating profit of 14.1 trillion won. Previously, securities firms had forecast Samsung Electronics' first-quarter sales at 75.1454 trillion won and operating profit at 13.1031 trillion won.

Sales rose 17.76% year-on-year, marking an all-time high. Compared to the previous quarter, sales increased by 0.56%. Operating profit also increased by 50.32% year-on-year and rose 1.66% compared to the previous quarter.

Since recording sales of 73.98 trillion won in the third quarter of last year, Samsung Electronics has succeeded in surpassing 70 trillion won in quarterly sales for three consecutive quarters. If this trend continues, Samsung Electronics is expected to be the first domestic company this year to exceed 300 trillion won in sales and 60 trillion won in operating profit.

The undisputed driving force behind Samsung Electronics' 'record-breaking performance' in the first quarter is undoubtedly 'semiconductors.' Thanks to the smaller-than-expected decline in memory semiconductor prices, the company easily overcame the traditionally weakest first quarter, known as the 'lean season.' Considering the numerous internal and external adversities such as the spread of COVID-19, the global supply chain crisis, and the Ukraine situation, this has reaffirmed the success formula of 'Semiconductors are indeed Samsung.'

Although the business segment results have not been disclosed due to the tentative nature of the figures, securities firms expect Samsung Electronics to have recorded sales of over 25 trillion won from semiconductors alone in the first quarter. Given that the first quarter is traditionally the off-season in the electronics industry, sales are expected to decline compared to the third and fourth quarters of last year, but the decline was not significant, and there was a clear growth trend compared to the same period last year.

In fact, the market had expected the price decline of DRAM and NAND flash in the first quarter to reach 6.2% and 5.1%, respectively, but the situation turned out to be much better. According to TrendForce, the fixed transaction price of DRAM last month remained flat for the second consecutive month without rising or falling. Although the downward trend in DRAM prices is expected to continue into the second quarter, NAND prices are anticipated to rebound by 5-10% in the second quarter due to reduced supply from global manufacturers.

Securities firms also pointed to this 'rapid recovery' in the memory market as the background for Samsung Electronics' strong performance. Noh Geun-chang, a researcher at Hyundai Motor Securities, said, "Contrary to expectations that DRAM and NAND shipment growth rates would both record single-digit early declines in the first quarter, they were stable and increased by 3%, respectively." Choi Do-yeon, a researcher at Shinhan Financial Investment, also predicted, "The decline in memory semiconductor prices will be smaller than market expectations."

The success of the Galaxy S22 series launched in the first quarter, despite the 'Game Optimization Service (GOS)' controversy, is also analyzed to have had a significant impact on the performance. According to the industry, the sales volume is expected to surpass 1 million units about two weeks earlier than the previous model, the Galaxy S21. Considering its release at the end of February, this means that more than 23,000 units were sold daily on average.

Furthermore, the external aftereffects of Russia's full-scale invasion of Ukraine, which was considered a negative factor, did not have a significant impact. Samsung Electronics has suspended exports to Russia due to this situation, but the regional share is so small that it does not greatly affect overall performance.

Samsung Electronics is also expected to post 'strong results' in the second quarter. Due to factory shutdown issues at major global NAND manufacturers such as Kioxia and Western Digital, Samsung Electronics is expected to benefit indirectly, and the prolonged parts supply issues are anticipated to accelerate the timing of semiconductor price rebounds.

The foundry (semiconductor contract manufacturing) sector, which had yield (ratio of normal products among manufactured products) issues, is also analyzed to be in a relatively good condition recently. Due to the base effect of the shutdown of the Austin plant in the U.S. last year, a significant increase in sales is expected this year.

Meanwhile, the tentative results are estimated based on the Korean International Financial Reporting Standards (IFRS) and are provided to assist investors' convenience while the settlement has not yet been completed. Samsung Electronics has been providing quarterly earnings forecasts since July 2009, the first among domestic companies.

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