After a solid performance in Q3 2020, Samsung announced its earnings for Q4 2020 and FY 2020 earlier today. Despite the COVID-19 pandemic and lower demand for various products, the company put up a solid performance due to the strong demand for semiconductor chips and displays. However, its performance in Q4 2020 wasn’t as good as it was in Q3 2020.
Samsung Electronics said that its consolidated revenue was KRW 61.55 trillion (around $55.33 billion) and operating profit was KRW 9.05 trillion (around $8.13 billion) during Q4 2020. For the full-year 2020, the South Korean tech giant’s revenue stood at KRW 236.81 trillion (around $212.82 billion), and operating profit stood at KRW 35.99 trillion (around $32.33 billion). Its profit rose 26.4% in Q4 2020 when compared to Q4 2019. However, its profits fell 26.7% compared to Q3 2020 due to weaker memory prices, negative effect on the Korean Won, and slightly sluggish sales.
Compared to 2019, Samsung’s full-year operating profit rose 29.6% and annual sales increased 2.8%. The company had unveiled its Q4 2020 earnings expectations a few weeks ago.
Smartphone sales improved in Q4 2020, but profit declined
Samsung’s smartphone sales increased in Q4 2020 due to year-end demand and global economic recovery, but the profits declined due to “intensifying competition and higher marketing expenses.” The smartphone division’s consolidated revenue was KRW 22.34 trillion (around $20.03 billion) and operating profit was KRW 2.42 trillion (around $2.17 billion) during the quarter. It managed to maintain a double-digit profit margin by improving the cost structure through component standardization. The company says that it expects weaker smartphone and tablet sales in Q1 2021, but the profit margin will rise due to Galaxy S21 sales and the launch of some mass-market products.
The company mentioned in its press release that it would expand the Galaxy Z Flip and Galaxy Z Fold smartphone lineup in 2021. Samsung will also expand its 5G smartphone portfolio this year along with more tablets and wearables. It expects that smartphone sales will reach the pre-COVID-19 levels this year. Samsung Networks, the company’s network business arm, improved its QoQ performance by gaining 4G and 5G contracts in Japan, North America, and South Korea.
Semiconductor sales improved, but falling prices affected profits
Despite solid shipments in Q4 2020 when compared to Q3 2020, the company said that profits in its semiconductor business declined. Memory (DRAM) chip prices fell, USD value declined compared to KRW, and the company also bore some initial costs for setting up new chip production lines. Samsung’s semiconductor business posted consolidated revenue of KRW 18.18 trillion (around $16.3 billion) and an operating profit of KRW 3.85 trillion (around $3.45 billion) for Q4 2020.
There was an increased demand for DRAM and NAND chips as companies set up new data centers and launched new Chromebooks, PCs, gaming laptops, gaming consoles, and GPUs during Q4 2029. The company says that it expects DRAM demand to recover in the first half of this year due to the strong demand for smartphones and servers. It will accelerate the migration to 1z-nm DRAM and 6th generation V-NAND production this year. Q1 2021 earnings are expected to decline, though, due to the ramp-up of new production lines.
System LSI, Samsung’s chip design arm, launched its first 5nm product (Exynos 1080) during the fourth quarter of 2020. The South Korean tech giant also plans to launch more 5G smartphone chipsets and high-resolution camera sensors in 2021. Samsung Foundry aims to produce more 5nm chips for various fabless semiconductor clients. It will also focus on the development of first-generation and second-generation 3nm fabrication processes.
Display panel sales and profits reached a record high on the back of higher smartphone sales, increased TV panel prices
Samsung Display posted consolidated revenue of KRW 9.96 trillion (around $8.93 billion) and an operating profit of KRW 1.75 trillion (around $1.56 billion). These are the company’s highest-ever quarterly numbers, thanks to a gradual recovery in smartphone and TV segments. Mobile display panel earnings rose sharply due to higher smartphone sales in the holiday period, while losses from large-sized display panels narrowed due to steady sales of TVs and rising average prices of TVs and monitors since the pandemic.
The company’s display panel manufacturing arm recently unveiled OLED panels for laptops, and various brands are expected to buy those panels this year. Samsung’s OLED panels are also expected to appear in more high-end and mid-range smartphones, tablets, and automobiles. It will also launch QD-OLED panels for TVs later this year.
Samsung to focus on high-end TVs and home appliances in 2021
The South Korean consumer electronics giant said that its home appliances and TV divisions posted consolidated revenue of KRW 13.61 trillion (around $12.2 billion) and operating profit of KRW 0.82 trillion (around $735 million) in Q4 2020. The TV business posted lower profit compared to previous quarters due to higher competition and rising costs. However, year-end shopping festivities in “advanced markets” improved overall sales.
Samsung will focus on sales of high-end QLED TVs, “super large screen TVs,” Neo QLED TVs, and gaming monitors this year. In the home appliances segment, the company’s sales increased due to the at-home trend in both developed countries and emerging markets like India and Latin America. Samsung will focus on sales of its high-end and customizable home appliances in the BESPOKE lineup.
The post Samsung’s net profit rose 26.4% in Q4 2020 due to strong chip and display demand appeared first on SamMobile.
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