Riding high on solid demand for server memory chips and higher margins in chip contract manufacturing, Samsung Electronics’ fourth-quarterly operating profit swelled 52% on-year to its highest for the quarter in four years.
According to the company estimates, October-December profit at 13.8 trillion won ($11.5 billion), which would be the tech giant’s highest fourth-quarter operating profit since Q4 2017.
The result missed a Refinitiv SmartEstimate of 15.2 trillion won, which analysts attributed to items such as employees’ bonuses, marketing costs for its mobile business, and ramp-up costs for new display panels being included in the quarter.
Revenue also swelled by about 23% from the same period a year earlier to 76 trillion won, the company said in a short preliminary earnings release, in line with market expectations. Samsung is due to release detailed earnings on Jan. 27.
Although prices of memory chips dipped during the quarter, increased demand from server clients lifted Samsung’s quarter-on-quarter shipments of both DRAM chips, widely used in data centres, and NAND flash memory chips, used for data storage in tech devices.
Further upon positive trends, Samsung Electronics’ shares climbed about 11% since early November strengthening anticipation of memory chip prices dipping less than expected during the first half of this year then rebounding, boosted by new data centres and demand for videos, games, conferencing and other traffic-heavy services.
Samsung’s logic chip business, which includes chip contract manufacturing that competes with Taiwan Semiconductor Manufacturing Co (TSMC), is also expected to post a jump in operating profit to above 1 trillion won in the December quarter due to more deliveries and higher prices, Hanwha Investment & Securities analyst Lee Soon-hak said.