Namna as’Second Number in 10,000 Years’ of Samsung Electronics… Behind the world’s No. 1 Apple, hit by Intel

Input 2021.02.01 06:00

Despite record-breaking sales, Apple and Intel
Share smartphones in the fourth quarter of last year to Apple
Intel, solid number one… Samsung, also behind TSMC, ranked third
Massive investment and M&A was announced, but’the thorny road’

In spite of the US-China trade conflict and the new coronavirus infection (Corona 19), Samsung Electronics, which recorded the fourth highest operating profit last year, is actually the world’s No. 1 company in its flagship business, mobile (smartphones, laptops, tablets, etc.) and semiconductors. · It was found that it did not close the gap with Intel at all.

Apple’s operating profit in the fourth quarter of last year was three times higher than the annual operating profit of Samsung Electronics’ IM (IT mobile) division. In the fourth quarter of the smartphone market, Apple also surpassed Samsung with a 23.4% market share and rose to the top. After allowing Samsung Electronics to reverse in the second quarter of 2017, Intel has not allowed overtaking at all since the first quarter of 2019.

This year too, amid concerns about various economic uncertainties such as Corona 19, the market outlook is uncertain, and industry anxiety that Samsung Electronics will remain the’second number in 10,000 years’ is growing. Samsung Electronics plans to continue its growth momentum by pursuing large-scale M&As within three years with its 116 trillion won in cash, but it is not easy as competitors are also predicting massive investments.

◇ Apple opens the era of $100 billion in sales in the fourth quarter… Iphone 12 sprint

In the fourth quarter of last year, Apple recorded sales of $11.43 billion (approximately 122.6 trillion won), setting a record high in quarterly sales. The fourth quarter’s operating profit was $2.85 billion (about 32.15 trillion won). This favorable performance was driven by the popularity of the iPhone 12, which was released in October last year. Following the non-face-to-face trend of Corona 19, sales of iPads and Macs also increased by double digits.

Samsung Electronics’ IM division posted sales of 99.59 trillion won last year, which is less than Apple’s quarterly sales. In addition, the IM division’s annual operating profit (1.1 trillion won) was only a third of Apple’s quarterly operating profit.

According to market research firm IDC, Apple shipped 90.1 million units in the smartphone market in the fourth quarter of last year and ranked first in the world with a market share of 23.4%. On the other hand, Samsung only shipped 73.9 million units during the same period, with a market share of 19.1%, less than 20%.

Samsung Electronics is planning to take away the lost share in this market with the early launch of the Galaxy S21, but the gap between Apple and Samsung Electronics is expected to widen further. According to market research firm Strategy Analytics (SA), the fifth-generation mobile communication (5G) smartphone market this year is expected to reach 600 million units, more than twice that of last year, which was at 270 million units. In this market, Apple is expected to be the number one with 29% market share. It is predicted that Samsung Electronics will record 16.8%.

◇ Intel in crisis, the world’s No. 1… Samsung Electronics is also in the third place behind TSMC in foundries

Intel said last year that it recorded 77.8 billion dollars in sales (about 87.3 trillion won) and 23.7 billion dollars in operating profit (about 26.5 trillion won). Compared to the previous year, sales increased 8.2% and operating profit increased 7.5%. Despite being pursued by rival AMD and having difficulty in introducing microprocessing, it is still sticking to the world’s No. 1 position.

Samsung Electronics’ semiconductor business recorded sales of 72.86 trillion won and operating profit of 18.81 trillion won last year. Although they increased 12% and 4.8%, respectively, compared to the previous year, they were slightly less than Intel’s earnings growth. Samsung Electronics surpassed Intel in the second quarter of 2017 and rose to the top spot in the world.

Samsung Electronics also found that its operating profit was inferior to TSMC, which is the world’s No. 1 foundry (consigned semiconductor production). Last year, TSMC achieved sales of 1,3615 billion Taiwan dollars (TWD, about 54.3 trillion won) and operating profit 5565 billion Taiwan dollars (TWD, about 22.200 billion won). In terms of sales, it was lower than that of Samsung Electronics, but operating profit was rather about 3 trillion won. This means that TSMC did business more efficiently than Samsung Electronics.

TSMC’s operating profit until 2018 was about a third of that of Samsung Electronics’ semiconductors. However, it surpassed Samsung Electronics by surpassing 20 trillion in operating profit last year. This year, in order to widen the gap with Samsung Electronics, 31 trillion won of money will be poured into the facility.

◇ Samsung Electronics announced massive M&A and facility investment… “It will be difficult if it is not an investment in history”

On the 28th of last month, Yoon-ho Choi, President of Samsung Electronics’ Management Support Office, said in a conference call held after the annual and fourth quarter results of 2020 were announced, “Samsung Electronics intends to further solidify its market leadership position in the existing industry and strengthen the foundation for sustainable growth in new industries. “For this, we will strategically expand facility investment and promote M&A by actively using the funds we have.”

Currently, Samsung Electronics has 11 trillion won in cash assets as of the third quarter of last year. The industry expects this money to flow to automotive semiconductors and foundries. The strongest acquisition targets are NXP in the Netherlands, which is the second largest market share in global automotive semiconductors, and STMicroelectronics, which is the fourth in Switzerland. However, Samsung Electronics said, “There is neither the timing nor the target set,” and “M&A is not imminent.”

Interest is also drawn to the scale of facility investment. Last year, Samsung Electronics invested 38.5 trillion won, an increase of 43% from 2019, in facilities such as semiconductors and displays. This year, investments in foundry are predicted to catch up with TSMC. Kim Sun-woo, a researcher at Meritz Securities, said, “With the industrial structure (following TSMC), facility investment in foundries inevitably increases.” Securities market predicts that Samsung Electronics will invest 11 trillion won in the system semiconductor business, including foundries this year.

An industry insider said, “In a situation where the gap with TSMC in Foundry is significant, if Samsung Electronics does not make aggressive investments, it will inevitably fall into second place forever.” Based on capabilities, technology investments such as form factor (device type) innovation should be made.”