Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Samsung Electronics expects further sales growth following records set in 2021
Visitors to Samsung Electronics' store in Seoul try out mobile gadgets, Friday. Yonhap
By Baek Byung-yeul
LG Electronics also reports record sales in 2021
By Baek Byung-yeul
Samsung Electronics and LG Electronics are estimated to have posted record sales in 2021 thanks to outstanding results in their chip and home appliance businesses, respectively.
On Friday, the two IT giants released their earnings previews for the October-December 2021 period. In its earnings guidance, Samsung reported its sales reached 76 trillion won ($63.3 billion) in the fourth quarter of last year, up 23 percent from the year before, with operating profit jumping by 52 percent to 13.8 trillion won.
As a whole, Samsung's 2021 sales and operating profit are expected to reach 279 trillion won and 51.57 trillion won, respectively, up 17 percent and 43 percent from the year before. Especially, its sales are likely to be the highest ever while its operating profit is the third-highest since 2017 and 2018 when the company enjoyed a semiconductor super cycle.
Analysts said its semiconductor business contributed the most to the jaw-dropping performance, as they presumed the memory chip business generated nearly 95 trillion won in sales last year, about 30 percent more than the year before. They also estimated that memory chips would have earned an operating profit of 29 trillion won, around 60 percent of the firm's total operating profit.
The solid performance of memory chips is attributed to rising demand from server and data centers despite the price of DRAM memory chips having decreased since the third quarter of 2021.
Though Samsung didn't break down the performance of each division, its smartphone business also contributed to the rise in earnings. In 2021, Samsung is presumed to have sold about 8 million foldable phones, quadrupling the number of devices sold in 2020.
Analysts said Samsung will be able to continue its upward trend this year. “It is positive that memory semiconductor down cycles in the first half of 2022 are expected to be less than before,” said Doh Hyun-woo, an analyst at NH Investment & Securities.
He also estimated the price decline of DRAM in the first quarter will be limited to minus 7 percent compared to the previous quarter, due to the ongoing demand for non-face-to-face services, and the price could rebound in the second half.
LG also said its estimation of its fourth-quarter sales was 21 trillion won, up 20.7 percent from the year before. However, its operating profit is estimated to come in at 681.6 billion won, down 21 percent from the year before. For the whole of 2021, the company is expected to post 74.72 trillion won in sales and 3.86 trillion won in operating profit.
If LG's estimate is correct, its sales will be the highest in its history. The figure had been remaining at around 60 trillion won for four straight years from 2017 to 2020. On the other hand, the operating profit is down 1 percent from the year before due to rising costs for raw materials and logistics.
The industry view is that LG will be able to surpass its 2021 performance this year thanks to its increasing market share in high-priced OLED TV. “LG, which has the No.1 market share in OLED TVs, can expect additional increases in sales and operating profit due to the increase in the proportion of OLED TVs in the entire TV market,” said Park Kang-ho, an analyst at Daishin Securities.