'5G smartphones will clearly boost chip demand': Samsung

A woman passes by an advertisement of Samsung Electronics' Galaxy 5G Note10 smartphones at its shop in Seoul, Thursday. AP-Yonhap

By Kim Yoo-chul

Consumer electronics products featuring faster fifth-generation (5G) telecommunications technology will “clearly boost” the demand for computer memory chips throughout this year providing fresh impetus for profit growth at Samsung Electronics.

“Demand for memory chips will rise this year as the 5G smartphone market will continue to expand. Estimated overall shipments of 5G smartphones this year would range between 100 million and 300 million,” Samsung Electronics Senior Executive Vice President Han Jin-maan told investors during a conference call on the results of its 2019 fourth quarter earnings, Thursday.

The Samsung executive added the world's top memory chip supplier expects the supply of high functional memory chips will remain tight, a plus factor in driving up prices.

“Regarding estimated bit growth in DRAM memory chips, Samsung expects a mid-10 percent growth this year, while that for NAND flash will rise to the mid-20 percent range. This is because of expectations of investments in expanded and data-intensive corporate servers as well as soon-to-be-released models that use new central processing units,” the executive said.

Bit growth refers to the amount of memory produced and is considered a “key barometer” for gauging market demand. A cut in the forecast could see leading chipmakers reduce investment in equipment and related parts, while limiting supply and pushing up prices.

During the call, another Samsung EVP Shin Dong-ho told investors he expects to see a continued roll out of 5G smartphones with Chinese phone vendors leading the race.

“It's a little tough to tell you exactly that the global semiconductor industry will see a major turnaround this year. The only thing we can tell you is that we expect the global DRAM chip market to stabilize. In terms of DRAM inventories, we would say the level will be normalized within the first half,” Shin said, adding the company will expand its mobile sensor chip lineup amid healthy demand for high-resolution phone camera sensors.

Semiconductors are the most profitable business for the technology heavyweight as it produces chips for its own devices, from home appliances to smartphones, and sells to other phone suppliers.

The chip division generated an operating income of 3.45 trillion won in the fourth quarter of last year. Samsung Electronics generated a total of 7.16 trillion won operating profit for the three months ending Dec. 31.

Regarding the specifics of its television business strategy, in which Samsung has also been a long-time sector leader, Vice President Kim Won-hee said he expects “single-digit” growth for the division.

“We are set to release home microLED TV sets in the latter half of the year,” Kim said. Samsung said it is on track to “gradually phase out” TVs using conventional LCD displays as it's been shifting toward TVs with quantum dot display screens, which offer an enhanced viewing experience.

“Samsung won't completely abandon the LCD display business as LCDs are still used in larger TVs and gaming monitors.”

In its handset business, Samsung said it will continue efforts to save costs by rolling out more budget models in key Asian target markets such as India. “Samsung plans to seek ways to improve profitability by selling more budget models in mass markets including India. If necessary, we will team up with online channels,” it said.

Samsung reported operating profit of 7.16 trillion won, down 34 percent and in accordance with its own previous estimate. Net profit fell 38 percent to 5.2 trillion won with revenue easing 1 percent to 59.9 trillion won, the company said. Samsung invested 26.9 trillion won in facilities last year with the company spending 22.6 trillion won in the semiconductor sector.