Samsung expects record Q4 operating profit, beating expectations
By Heekyong Yang and Joyce Lee
SEOUL, Jan 8 (Reuters) - Samsung Electronics on Thursday projected a three-fold jump in fourth-quarter operating profit from a year earlier to a record high as tight supply and a surge in artificial intelligence-driven demand stoked prices for conventional memory chips.
The results highlight how chip prices have rocketed as chipmakers scramble to keep up with demand for memory chips used in servers, personal computers and mobile devices to meet AI needs.
The world's largest memory chipmaker estimated an operating profit of 20 trillion won ($13.82 billion) for the October-December period, beating an LSEG SmartEstimate of 18 trillion won and up from 6.49 trillion won a year earlier, a regulatory filing showed.
The operating profit is a new quarterly record, topping its previous high of 17.6 trillion won in the third quarter of 2018.
Samsung shares closed down 1.6% after rising as much as 2.5% to a record high earlier in the session, with investors reaping profits from a 155% jump over the past year.
'TERRIFIC' CHIP DEMAND
The top makers of conventional chips, including South Korea's SK Hynix and Micron Technology, are struggling to meet demand and have to build more fabrication plants.
"The world is going to need more fabs and the reason for that is because of this new industry called AI factories," said Jensen Huang, CEO of the dominant maker of AI processors, Nvidia.
"It's good to be a semiconductor manufacturer," he told reporters at the Consumer Electronics Show in Las Vegas, adding that "the demand out there is really, really quite terrific."
The global DRAM market is expected to more than double to $311 billion in 2026 from last year, which would be nearly six times the market's size in 2023, Macquarie Equity Research said in a note on Tuesday.
DRAM chips are used in servers, computers and smartphones to temporarily store data and help run programs and applications smoothly and swiftly.
Contract prices for a type of DRAM chip rose 313% in the fourth quarter from a year earlier, according to data from market tracker TrendForce.
TrendForce expects conventional DRAM contract prices to rise a further 55% to 60% in the current quarter from the previous one.
Samsung, which is also the world's top maker of smartphones and TVs, expects revenue to rise 23% to a record 93 trillion won from a year earlier.
Its semiconductor business will account for the lion's share of its operating profit, generating about 17 trillion won in the fourth quarter, according to Ryu Young-ho, a senior analyst at NH Investment & Securities.
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