Samsung Electronics earned 36 trillion won last year in Corona… Riding the semiconductor supercycle this year

Input 2021.01.08 11:21 | Revision 2021.01.08 11:47

‘Semiconductor’ accounted for half of Samsung Electronics’ operating profit last year
Demand explosive increase amid corona non-face-to-face flow
Mobile/server DRAM drives the semiconductor industry
“Semiconductor supercycle is coming…the performance will be better this year”

In spite of the major bad news of the new coronavirus infection (Corona 19), Samsung Electronics’ annual operating profit in 2020 increased by 29.5% compared to the previous year. This is thanks to the robust semiconductor business, which is responsible for half of the annual operating profit (estimated value). While the semiconductor supercycle is expected to come this year, it is predicted that the performance of Samsung Electronics will also be warm.

According to the disclosure of Samsung Electronics on the 8th, Samsung Electronics’ fourth quarter 2020 results were 61 trillion won in sales and 9 trillion won in operating profit, up 1.87% in sales and 25.7% in operating profit from the same period last year. In 2020, the annual sales were estimated at 236.2 trillion won and operating profit of 35.95 trillion won. Compared to 2019, sales increased by 2.54% and operating profit increased by 29.46%.

Initially, Samsung Electronics’ earnings were expected to be sluggish due to the Corona 19 incident that struck in early 2020. However, the DS (device solution) division, which is in charge of semiconductors, was well and improved performance. The spread of non-face-to-face trends has resulted in a significant increase in semiconductor demand for information processing and storage, communication, and home appliances.

Samsung Electronics’ DS division’s 2020 operating profit is estimated to be about 19 trillion won. In the first to third quarters of last year, the DS division made an operating profit of about 15 trillion won, but it is expected to exceed 4 trillion won in the fourth quarter. According to the estimate, the DS division was responsible for more than half of the total operating profit of about 36 trillion won last year.

In particular, the DS division in the 2nd and 3rd quarters of last year achieved a favorable performance of over 5 trillion won in quarterly operating profit for the second consecutive quarter. In the memory field, sales of PCs, smartphones, and console game consoles increased, and in the system semiconductor field, the recovery of demand for major mobile parts for system LSIs and new foundry orders were key.

In the new year’s semiconductor market, there is high hope that a long-term boom, a so-called’supercycle’, when prices are steadily rising for more than a year will come. The recent trend toward rising spot prices is fueling this analysis.

According to a recent report by the World Semiconductor Trade Statistics Organization (WSTS), sales in the global semiconductor market this year are expected to increase by 8.4% from last year to 469.4 billion dollars (approximately 515.35 trillion won). This is an upward revision from the 6.2% growth rate expected in June last year. Among them, the memory semiconductor market, such as DRAM and NAND flash, increased by 13.3% from last year to $135.3 billion (about 14,846 trillion won), WSTS predicted.

As the basis for this year’s semiconductor supercycle, experts cite an increase in demand and a shortage of supply. “If you look at the semiconductor export trend until November (last year), this year’s overall semiconductor exports will be good,” said Kim Yang-paeng, a researcher at the Industrial Research Institute. ), the demand for semiconductors will increase due to the increase in data usage and smartphone shipments.

Increasing demand for mobile semiconductors is expected to lead to higher semiconductor prices. Sales of the Apple iPhone 12 series are expected to be strong by the first quarter of this year, and Samsung Electronics will also use the Galaxy S21. China’s Oppo, Vivo, and Xiaomi are also aggressively targeting chip purchases in order to enjoy the effect of Huawei, which is subject to US sanctions.

Server semiconductor demand, which was slightly sluggish last year, is also expected to boom this year. According to the industry, purchase inquiries from Google and Amazon Web Services (AWS), which have hyperscale data centers operating more than 100,000 servers, have increased. The demand for server DRAM could increase. The PC isn’t expected to be bad either.

Park Yoo-ak, a researcher at Kiwoom Securities, said, “DRAM is expected to rise in fixed prices and record an earnings turnaround.” It is expected to improve profitability compared to that.”

IBK Investment & Securities researcher Kim Yun-ho said, “We believe that the memory industry is improving rapidly. In the case of DRAM, we are seeking a price rebound in the first quarter, mainly for PCs, and mobile and server prices are expected to remain at the level in the fourth quarter. I said. Researcher Kim said, “NAND is expected to be limited in terms of bit growth (bit growth and bit growth) and price decline of some companies due to the lack of controllers due to the recent shortage of wafer supply.” The strategy to expand its market share will have a negative impact on the NAND market.”