Samsung Expects Mobile Recovery After Weak Quarter
Samsung’s mobile business had lower profit and revenue in the last quarter of 2020, due to lower demand in the wake of widening COVID-19 restrictions. Nevertheless, the vendor expects recovery starting in the current quarter driven by new devices and rising average sale prices.
Operating profit for Samsung's IT and Mobile Communications Division fell 4 percent on a yearly basis to KRW2.4 trillion ($2.1 billion) and consolidated revenue fell 10.5 percent to KRW22.3 trillion. Mobile Communications Business VP Kim Sung-Koo said the profit decline was due to weaker sales, higher marketing spending and intensified competition, but noted its network business improved on the back of continued 5G expansion in South Korea and a pickup in global 4G and 5G rollouts.
Analysts claim that Samsung's latest smartphone flagship, the Galaxy S21, faces intense competition, mostly by Apple that reported a 17 percent increase in mobile revenue in the quarter. Despite forecasting declining global demand for smartphones and tablets in the current quarter, Kim said Samsung expects mobile revenue and profit to rise as its Galaxy S21 drives sales and higher ASPs, and it launches more mass-market models. For the full year, the company predicted demand will recover to pre-Covid-19 levels, with a gradual economic recovery and full-fledged expansion of the 5G market.
Net profit of the whole Group rose 23.3 percent to KRW6.45 trillion and revenue 2.8 percent to KRW61.55 trillion, driven by its memory chips and display businesses. The company forecast weaker profitability in the current period, as currency exchange and costs impact the memory unit, offsetting strong demand from mobile products and data centres. Samsung representative noted an important variable going forward is concerns about shortages of other components.