South Korea’s electronics industry expects robust first-quarter results thanks to strong sales in televisions, the mobile sector and home appliances, despite complications in the chips sector.
According to Shinhan Investment, one of the country’s major financial investment companies, Samsung Electronics is projected to register revenue and operating profit worth 61.7 trillion won ($54.6 billion) and 8.96 trillion won, respectively, in the first quarter thanks to strong performances in its mobile and consumer electronics divisions.
The report suggested greater-than-expected smartphone shipments worth 75 million units buoyed by the new releases of the Galaxy S21 series.
In contrast to the lackluster sales of the Galaxy S20 series in the first half of last year due to the effects of the coronavirus outbreak, the Galaxy S21 series is expected to recover sales to the level of the Galaxy S8 series, industry watchers say.
Samsung’s consumer electronics division, which saw a solid performance in the second half of last year, will continue to benefit from the demand of those who are staying indoors.
“There is currently a supply shortage of TVs going on in North America and Europe. This month, TV manufacturers and retailers have inventories less than 60 percent of appropriate level,” KB Securities analyst Kim Dong-won said.
Samsung’s Neo QLED TVs and Micro LED TVs, released this month, are expected to benefit from surging global TV demand.
Industry sources say Samsung’s mobile division is expected to log operating profit of 3.9 trillion won to 4.1 trillion won, while consumer electronics and display divisions are projected to see operating profits worth 930 billion won to 1 trillion won and 300 billion won to 600 billion won, respectively.
In total, KB Securities predict that the three divisions will allow Samsung Electronics to reach 9 trillion won in operating profit.
However, Samsung’s chip business sales are set to retreat despite rising DRAM prices, as the company suffers a prolonged shutdown of its chip plant in the US following a power outage triggered by severe weather. The shutdown, estimated to cost 400 billion won in damages, is expected to offset profits earned earlier this year.
KB Securities suggested that the operating profit of Samsung Electronics’ chip division will shrink to 3.2 trillion won in the first quarter from 4 trillion won on-year. Shinhan Investment offered a relatively optimistic figure of 3.75 trillion won.
SK hynix, which didn’t suffer any shutdowns, is set to reap 1.3 trillion won of operating profit in the first quarter, a 68.42 percent increase on-year.
Meanwhile, LG Electronics is projected to see a 20.29 percent and 17.3 percent growth in revenue and operating profit to 17.7 trillion won and 1.27 trillion won in the first quarter, respectively, according to Yonhap Infomax estimates. KB and DS Investment & Securities offered 1.5 trillion won and 1.2 trillion won, respectively, for LG Electronics’ operating profit.
“LG Display's Guangzhou panel plant is back in normal operation and its sales of OLED TV has increased in the first quarter. COVID-19 vaccinations in North America and Europe will also increase TV sales,” a DS official said.
Industry watchers say that LG Electronics’ performance will further improve once the company’s plan to sell off its mobile division takes shape in the first half of this year. Also, LG’s vehicle parts business is expected to turn a profit within this year, they added.
By Kim Byung-wook (email@example.com