By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -Samsung Electronics estimated on Friday its first-quarter working revenue would rise greater than 10-fold, topping market expectations, as chip costs have began to rebound from a extreme downturn due to a increase in synthetic intelligence.
However the steering was not sufficient to cheer traders who despatched Samsung (KS:) shares down 1.3% early on Friday, in step with a 1.1% drop within the wider South Korean market, as they await updates on progress in its high-end reminiscence chip enterprise that has been lagging behind rivals.
The world’s largest reminiscence chip and TV maker estimated its working revenue rose to a better-than-expected 6.6 trillion received ($4.89 billion) within the quarter ended March 31, beating a 5.7 trillion received LSEG SmartEstimate.
That was up 931% from 640 billion received a yr earlier and can be Samsung’s highest working revenue for the reason that third quarter of 2022.
However income missed expectations, seemingly rising 11% from the identical interval a yr earlier to 71 trillion received, under a LSEG SmartEstimate of 72.3 trillion received.
“Since income was largely in line however working revenue beat expectations, the stock valuation of NAND flash chips could have improved. Demand for NAND has improved, which can have improved margins as nicely,” stated Park Sung-soon, an analyst at Korea Investor Relations Service.
“Preliminary response to new Galaxy S24 smartphones was additionally constructive as a consequence of on-device AI, so if greater-than-expected portion of the high-margin premium smartphones had been offered, it will have an effect.”
The corporate is because of launch detailed earnings on April 30.
CHIP PRICE RISE
The higher efficiency got here as its chip division, historically its largest earner, is predicted to report its first quarterly revenue in 5 quarters as reminiscence chip costs bounce again from a deep trough that started in mid-2022 as a consequence of weak post-pandemic demand for devices.
DRAM chip costs rose about 20% through the first quarter versus the earlier quarter, whereas NAND flash chip costs elevated by 23% to twenty-eight%, in keeping with knowledge supplier TrendForce.
The bullish outlook for reminiscence chip demand, together with exploding urge for food for chips akin to high-bandwidth reminiscence (HBM) utilized in AI chipsets, has pushed a 34% rise in Samsung shares during the last 12 months, beating a ten% acquire within the broader market.
Nevertheless it has underperformed its cross-town rival SK Hynix, whose shares surged 122% throughout the identical interval, within the booming HBM market, partly as a consequence of its comparatively late entry into the section.
Analysts count on Samsung to catch up step by step, because it plans to start shipments of its newest and strongest HBM chips within the third quarter.
“Samsung is working exhausting on HBM, however nothing is seen but…In comparison with opponents, Samsung inventory has underperformed as a consequence of HBM,” stated Kim Roko, an analyst at Hana Securities.
“It could be tough to extend market share with the 8-layer HBM3E at the moment being launched, however no firm has but acquired approval for the 12-layer model anticipated close to year-end. I feel Samsung could move on what it has not been capable of do and win with extra superior merchandise.”
The 7.2-magnitude earthquake that struck Taiwan on Wednesday is prone to tighten semiconductor provide, and analysts stated Samsung and SK Hynix could hike reminiscence chip costs by a sharper margin than beforehand deliberate, doubtlessly boosting second-quarter earnings.
In its cellular enterprise, Samsung seemingly reported a strong revenue after launching gross sales of its new flagship Galaxy S24 smartphones in late January, analysts stated.
Eugene Funding & Securities estimates Samsung shipped 57 million smartphones through the quarter, up 8% from the fourth quarter, and the typical promoting value of Samsung smartphones seemingly rose 30% to $340 quarter-on-quarter, supporting income.
World gross sales of Galaxy S24 smartphones grew by 8% in comparison with the earlier yr’s Galaxy S23 collection throughout their first three weeks of availability, knowledge supplier Counterpoint stated.
($1 = 1,348.9300 received)