Mobiles, consumer electronics help Samsung post 46% higher net profit in Q1 2021, says GlobalData

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Following the news that Samsung Electronics has reported a net profit of KRW7.14 trillion for the first quarter (Q1) ended March 2021, a whopping 46.3% increase from a year earlier;

Nidhi Gupta, Technology Analyst at GlobalData, a leading data and analytics company, offers her view:

“The growth is primarily due to strong earnings in its mobile communications and consumer electronics divisions. The robust increase in the sales of its flagship smartphones like Galaxy S21 and mass-market smartphone models, together with high demand for digital appliances and premium TVs amidst the stay-at-home scenario, helped the company offset the lower earnings in its semiconductor and displays segments.

“The earnings decline in Samsung’s semiconductors business in Q1-2021 has been attributed to the disruption in production at its Texas facility, drop in NAND prices, and costs associated with the new production line ramp-up.

“Semiconductor profits are however expected to increase in Q2-2021 in line with the resumption of its Texas-based fabrication facility and an expected improvement in the memory market on the back of robust server demand.

“In the second half of the year, Samsung Electronics expects the demand for its mobile communication devices to increase and reach pre-COVID levels, helped by a gradual recovery in the economy and an expanding  5G market.

“GlobalData’s mobile broadband forecast pack reveals that 5G service penetration is set to increase globally from 6% of the population in 2020 to 38% by the end of 2025, driven by ongoing 5G network expansions across many countries. This expected rise in 5G service adoption will help Samsung Electronics to market its 5 G-enabled smartphones and premium foldable models through the forecast period.

“As restrictions on movements and lockdowns are eased in the second half of the year across several countries, consumers are expected to switch from home entertainment to outdoor activities, which could weaken the demand for TVs. The company is expected to leverage the growing demand for premium and lifestyle products and will continue to focus on these product categories in the near term.”

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Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.