Operating Profit Reaches KRW15.82tr
Samsung Electronics today reported financial results for the third quarter ended September 30, 2021.
Total consolidated revenue was a quarterly record of 73.98 trillion won, a 10% increase from a year earlier, which was the previous high. Operating profit increased 26 percent from the previous quarter to 15.82 trillion won, the second-highest ever, as favorable market conditions continued in the memory market while the foundry and display businesses achieved robust sales. The finished product businesses also posted solid performances.
The Memory Business saw a significant improvement in earnings with record quarterly bit shipment, as well as the second-highest revenue for DRAM, and the Foundry Business’s results improved due to strong sales to global customers. For the Display Panel Business, earnings rose as major smartphone customers launched new products.
The Mobile Communications Business saw a sequential improvement in earnings on the back of strong demand for new foldable models and low- to mid-range smartphones as well as growth from tablets and wearables. The Networks Business expanded its global business, including in North America and Japan, and continued to grow 5G network installations in the domestic market.
The Consumer Electronics Division saw strong expansion of the premium TV and Bespoke product lineup, but profitability declined due to rising raw materials and logistics costs.
The strength in most currencies against the Korean won, with the U.S. dollar in particular, had a positive impact of approximately 800 billion won on operating profit compared to the previous quarter.
For the fourth quarter, the company will focus on meeting demand for memory and system semiconductor products even as component shortages at some customers may affect demand. The company will also maintain solid profitability in the finished products businesses by strengthening our leadership and lineups in the premium segment.
For the Memory Business, a longer-than-expected component supply issue may need to be monitored due to potential impacts on set builds, but the company will actively address strong fundamental demand for servers from increased investments from technology companies. For the System LSI Business, supply of SoCs and related products for mobiles phones planned for 2022 is expected to increase, while earnings at the Foundry Business is expected to improve significantly by aggressively addressing the demand for advanced processes.
In the Display Panel Business, the mobile panel segment is expected achieve solid results on steady demand for smartphones and growing sales for new applications. The company is on track to begin mass production of quantum-dot (QD) displays as planned.
The Mobile Communications Business expects to post robust profitability by expanding sales of premium products such as foldable phones, meeting replacement demand with low- to mid-range 5G smartphones and increasing sales of tablets and wearables.
The Consumer Electronics Division will focus on growing sales of premium products during the year-end holiday season.
In 2022, amid expectations of a recovery in global IT demand, the company’s component business will focus on expanding advanced processes and enhancing product and technology leadership. In smartphones and consumer electronics, the company will prioritize solid profitability by strengthening the premium category leadership. However, uncertainties related to component supply disruptions and COVID-19 are likely to remain.
In the Memory Business, the company plans to boost cost competitiveness with the mass production of 14-nm DRAM and 7th generation V-NAND as well as next-generation products based on industry-leading extreme ultraviolet (EUV) technology. The System LSI Business will expand its business by reinforcing the SoC lineup, while the Foundry Business is expected to continue to deliver strong improvements in results by securing technology leadership through 3-nm Gate-All-Around (GAA) process and by meeting demand through active investments.
For the Display Panel Business, the portion of OLED panels in the market is expected to increase with higher penetration of 5G smartphones as the company closely monitors supply of components such as DDIs. For the large panel business, Samsung will strive to secure leadership in the premium TV segment with QD displays.
In the Mobile Communications Business the company will strive to improve sales and profitability by strengthening its position in the premium market with expanding sales of flagship products including foldable phones as well as offering a stronger lineup of 5G smartphones for the mass market. The company will also continue to bolster the tablet and wearables business and develop industry-leading technology. The Networks Business will continue to enhance hardware with custom 5G chips and strengthen software-based virtualization solutions for future growth as the company pursues continued expansion overseas.
The Consumer Electronics Division expects overall demand to weaken, but will focus on proactively capturing growing demand for premium TVs and increasing global sales of Bespoke products.
The company’s capital expenditures in the third quarter reached 10.2 trillion won, including 9.1 trillion won spent on semiconductors and 0.7 trillion won on displays. Total capital expenditures so far in 2021 were 33.5 trillion won, including 30 trillion won for semiconductors and 2.1 trillion won for displays.
The Semiconductor businesses posted 26.41 trillion won in consolidated revenue and 10.06 trillion won in operating profit in the third quarter.
The Display Panel Business recorded 8.86 trillion won in consolidated revenue and 1.49 trillion won in operating profit for the third quarter.
The IT & Mobile Communications Division earned 28.42 trillion won in consolidated revenue and 3.36 trillion won in operating profit for the third quarter.
The Consumer Electronics Division, comprised of the Visual Display and Digital Appliances businesses, recorded 14.10 trillion won in consolidated revenue and 0.76 trillion won in operating profit in the third quarter.