Samsung, a leading global manufacturer of internet-connected big-screen TVs and smart phones, is thriving amid a global chip shortage that’s knee-capping its competitors in key markets.
The South Korean consumer electronics giant said it will likely report a 53% increase in quarterly profit and a 19% uptick in revenue when it presents its Q2 earnings later this month. Both figures will easily surpass analysts consensus forecasts.
In markets like the streaming hardware business, Samsung rival Roku has told investors to expect negative margins for the remainder of 2021, with the price of silicon skyrocketing. Roku and Samsung compete head-on globally to control the operating systems of smart TVs.
But unlike Roku, Samsung manufactures its own chips--most notably, for smart phones--and that semiconductor business is driving its profits.
Amid the chip shortage, the company has seen prices increase by as much as 20% globally for its direct random-access memory (DRAM) chips. According to data just released by Strategy Analytics, Samsung is the global leader in supplying DRAM and other chips to the global smart phone industry, controlling 49% of the market.
Samsung’s silicon business is thriving so much, it’s offsetting declines in the company’s various device verticals, caused by shortages of silicon the company doesn’t make.
With the chip shortage expected to last into 2022, this is an important advantage, as Samsung looks to weather a storm that might cause some of its competitors to retrench.
