Business · Markets · 1 day ago
Samsung’s record profits have not convinced investors
South Korean electronics and chip maker Samsung reported more than $80 billion in operating profit for its latest quarter.
That was a 20 percent increase from the previous quarter and 780 percent above the same period a year earlier.
Demand for memory chips used in data centres has surged as companies build systems for artificial intelligence.
Yet Samsung’s share price has not kept pace with its profits, and the shares trade at about 5.5 times expected earnings for the year.
Investors are concerned because chip prices and demand can swing sharply, and Samsung and its competitors are investing $500 billion in new factories that could later increase supply and push prices down.
Samsung and analysts disagree about how long the current supply shortage will last, with estimates extending to 2027 or 2028.
Its range of businesses and strong cash flow may help cushion the company when the chip market turns, but the timing and scale of any change remain uncertain.
Samsung reported preliminary operating profit of more than $80 billion for the latest quarter, with a profit margin of about 55 percent.
Operating profit rose 20 percent from the previous quarter and 780 percent from the same period a year earlier.
Despite the results, Samsung shares fell nearly 3 percent in Seoul on Thursday, while rival SK Hynix shares fell 1.75 percent.
Samsung shares were valued at about 5.5 times expected earnings for the current year.
Investors are concerned that high chip prices may not last, as the chip industry’s cycles can lead increased production to bring prices and profits down.
- Who
- Samsung, the South Korean electronics and chipmaker
- What
- Samsung reported record preliminary quarterly operating profit, but its shares remained weak.
- When
- The latest quarter; the preliminary results were announced on Thursday.
- Where
- Seoul, South Korea
- Why
- Investors are weighing current chip profits against the risk that the industry’s supply-and-demand cycle will bring prices down.
This story does not have two clearly opposing sides.
No direct quotes in the coverage so far.
This story does not have a timeline yet.
- Latest-quarter operating profit
- More than $80 billion
- Year-on-year operating-profit increase
- 780 percent
- Samsung share valuation
- 5.5 times expected earnings for the current year
- Samsung share move on Thursday
- Down nearly 3 percent in Seoul
- SK Hynix share move on Thursday
- Down 1.75 percent
Sources
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