Samsung Electronics recorded an increment of 44.19 percent in first-quarter operating profit today., owing to strong smartphone sales and the launch of its flagship Galaxy S21 model. The firm said in earnings forecast that net income for January to March will be 9.3 trillion won (US$8.3 billion), up from 6.45 trillion, a year ago. Samsung Electronics is the flagship company of the Samsung Group, which is by far the largest of the chaebols (family-controlled conglomerates) that rule South Korea, the world’s 12th largest economy. It is critical to the country’s economic wellbeing because the conglomerate’s net revenue accounts for a quarter of the country’s GDP.
The coronavirus has wreaked havoc on the global economy, resulting in months of lockdowns and travel bans around the world. However, several tech firms have benefited from the pandemic, which has killed over 2.8 million people worldwide. However, working from home, fueled by the Coronavirus, has boosted demand for Samsung chips, as well as home appliances like TVs and washing machines.
Analysts believe the company has benefited from the introduction of its Galaxy S21 series in January, which was more than a month ahead of the flagship product’s normal annual launch date. “The lower US$799 starting price has been key to the popularity of this new flagship,” said Counterpoint Research in a survey. “Lower prices, together with trade-in incentives that effectively make the S21 smartphone free, are helping to boost demand for these ‘entry-level’ flagships,” says the study.
According to Trend Force, a Taipei-based business tracker, the global chip manufacturing industry was expecting record sales this year, despite the persisting stay-at-home economy. However, in February, power outages across Texas, triggered by a strong winter storm, which forced the closure of semiconductor factories, clustered around Austin, including Samsung’s.
Samsung said activities at its factory were almost back to normal by late March, but the Yonhap news agency in South Korea estimated that the company could lose about 400 billion won (US$357 million), as a result of the shutdown. Nonetheless, according to Hi Investment and Securities in Seoul, Samsung’s Q1 success will be boosted by its mobile sector, which will be bolstered by solid shipments and cost control. According to Trend Force, the tech giant is estimated to have generated about 62 million smartphones in the first quarter, with a market share of 18.1%.
According to the forecasts, Samsung will retake its global mobile market leadership, which it lost to Apple in the fourth quarter of 2020. Samsung is expected to lead the annual list of smartphone brands by demand for the entire year of 2021, according to Trend Force. In January, however, Samsung’s de facto chief Lee Jae-yong was sentenced to prison for his involvement in the sprawling corruption case, that took former President Park Geun-hye down.
After his father Lee Kun-hee, the chairman who developed Samsung Electronics into a global giant, died in October, the ruling cast doubts on the company’s succession. Experts agree that a leadership vacuum could stymie the company’s ability to make large-scale acquisitions in the future, which have been crucial to its growth.
