Samsung Semiconductor’s operating profit is pushed to the third place among the world’s top three

Samsung Electronics’ semiconductor operating profit was pushed to the third place with the results of last year’s announcements of the global semiconductor companies’ top three, Intel, Samsung Electronics, and TSMC in Taiwan. Amid global uncertainties such as the novel coronavirus infection (Corona 19) and trade disputes between the US and China, Samsung Electronics’ semiconductors were also touted, but Intel and TSMC made more profits.

According to the industry on the 24th, Samsung Electronics, which revealed its tentative results on the 8th, is estimated to have a total of 73 trillion won in annual sales and 19 trillion won in operating profit in the semiconductor division last year. Although there were no confirmed results to be released on the 28th, it is an improvement over 2019 results (sales of 64.900 trillion won and operating profit of 14 trillion won). This is the result of the performance of semiconductor companies due to non-face-to-face demand such as telecommuting, remote classes, and video conferencing due to COVID-19 overall last year.

However, Intel and TSMC, which compete with Samsung Electronics in the global semiconductor market, had higher profits than Samsung. Intel, which unveiled its results on the 21st (US local time), posted annual sales of about 77.8 billion dollars and operating profit of about 23.7 billion dollars last year. Applying the current KRW-dollar exchange rate, it is approximately 8,610 trillion won and 26.2 trillion won, the highest among global semiconductor companies in both sales and operating profit. This is about 13 trillion won in sales and 7 trillion won in operating profit than Samsung Electronics. Last year, Intel recorded all-time high sales.

TSMC, a Taiwanese foundry (semiconductor consignment production) company that revealed its confirmed results on the 14th, last year saw sales of 1.339.3 trillion Taiwan dollars (about 52.900 trillion won) and operating profit of 5665 billion Taiwan dollars.

It was counted as (about 22.4 trillion won). Sales are 20 trillion won or more lower than Samsung Electronics’ semiconductors, but operating profit is about 3 trillion won.

Thanks to the propaganda of Intel and TSMC, Samsung Electronics was pushed to the second place in sales and third place in operating profit among global semiconductor companies. Samsung ranked first in both sales and operating profit in 2017-2018 during the booming memory semiconductor period, but except that time, most of the sales and operating profits remained second only to Intel. In addition, with the rapid growth of the global foundry market from 2019, TSMC, which has advanced technology and capital power in advanced processes, is hitting a fore. TSMC produced similar operating profits to Samsung Electronics (14 trillion won), which had been somewhat sluggish after the super boom in 2019, and widened the gap by surpassing Samsung Electronics’ profits last year. Even considering that Samsung Electronics’ earnings were somewhat disadvantageous due to the strong won-dollar exchange rate in the fourth quarter of last year, TSMC made more profits.

The biggest gap among these’top 3’is the operating margin. TSMC, which is only a foundry, has an operating margin of 42.3% last year. Despite the loss of a large customer named Huawei in China due to US sanctions in the second half of last year, the company made more than 40% of its operating profit due to the shortage of foundry supply. TSMC’s operating margin from 2017 to 2019 was 37.2 to 39.4%. By comparison, the operating margin of Samsung Electronics’ semiconductor division last year is estimated to be around 26% on average. This is lower than that of Intel (30.4%). Samsung Electronics, an integrated semiconductor company (IDM), has a wide operating margin gap by sector, not only memory semiconductors such as DRAM and NAND flash, but also system semiconductors and foundries such as mobile application processors (AP).

Samsung Electronics’ DRAM division has a high operating margin of 40%, but NAND is estimated to be around 20% and non-memory division at 10%. In the system semiconductor and foundry divisions, where Samsung Electronics is missing the top spot in the global market, it is not making as much profit as memory semiconductors.

However, in line with the semiconductor’s super cycle, which is expected to continue for about two years from this year, there is a possibility that Samsung Electronics will rise again in earnings. Securities prices predict that Samsung Electronics’ semiconductor division sales will reach 80 trillion to 88 trillion won and operating profit of 25 to 27 trillion won due to the increase in DRAM prices this year, and that by 2022 will be even higher. Although the semiconductor operating profit alone exceeded the level of 2017-2018, which exceeded 44 trillion won, it is higher than the last two years.

Reporter Woojung Lee [email protected]

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