Samsung Electronics reported first-quarter sales at KRW 65.4 trillion, up 18 percent from a year earlier. Growth was led by its smartphone business, helping to offset the disruptions in the semiconductor market. Operating profit rose 46 percent to KRW 9.38 trillion, and the net profit improved to KRW 7.14 trillion from KRW 4.88 trillion a year ago.
Last year's Q1 was marked by the first effects of the Covid-19 pandemic, which initially hit supply chains and then started affecting end-user demand from the end of the quarter. This year the company profited from the recovery in demand and the early release of its flagship Galaxy S21 smartphone series in January.
The IT & Mobile Communications Division posted KRW 29.21 trillion in revenue for Q1, up 12 percent from a year earlier, and operating profit rose to KRW 4.39 trillion from KRW 2.65 trillion a year ago. Samsung said revenues and profitability also improved significantly compared to Q4, thanks to demand for the S21 series as well as mass market phones and a growing contribution from related products such as tablets, PCs and wearables.
In the second quarter, the company expects a boost from the new A series phones as well as tablets and wearables. Sales of the flagship phones will likely slow, and short supplies of some components could also lead to a drop in revenues, the company warned. Overall, Samsung expects a seasonal slowdown in the smartphone market in Q2, which will also impact its semiconductor and displays businesses.
For the second half of this year, Samsung expects market demand to recover to the pre-Covid level, backed by a gradual economic recovery and continued expansion of the 5G market. The company plans new foldable devices to expand this market segment, as well as more affordable 5G phones and an expanding line-up of tablets, laptops and wearables.
Samsung's semiconductor business posted lower profit in Q1, at KRW 3.37 trillion versus KRW 3.99 trillion a year ago, due to the disruption in production at its Austin factory and costs for ramping up new production lines. Revenues were still 8 percent higher year-on-year and grew 5 percent on a sequential basis to KRW 19.01 trillion.
Disruptions to smartphone components aside, Samsung expects chip demand to remain solid in Q2 and profits to improve. Production has been fully restored at the Austin site. Demand should strengthen further in the second half of the year as global economies recover, a new production line starts and the foundry business grows.
