Samsung records highest revenue in 2021 with chip business leading profitability

Samsung on Thursday announced it recorded 279.6 trillion won in revenue and 51.63 trillion won in operating profit for fiscal year 2021. It is an increase of 18% and 43.5%, respectively, from the year prior. The revenue figure is Samsung’s highest to date, with the company saying its strong performance was propelled by strong mobile and chip sales.

In the fourth quarter alone, the company recorded revenue of 76.6 trillion won and operating profit of 13.9 trillion won, an increase of 24% and 53.3%, respectively, from the same time period in 2020.

Samsung said the fourth-quarter revenue growth was driven by expanded sales of its premium smartphones and consumer electronic products. Its operating profit also increased from the performance of its chip business, though there was a special bonus payment to employees during the quarter, the South Korean tech giant said.

During the fourth quarter, Samsung’s chip business contributed over half of the company’s operating profit with 8.84 trillion won. Samsung said it saw solid demand for memory products for servers. The company faced global supply chain issues and a drop in average chip prices during the quarter, however, which led to it refraining from pushing too aggressively in expanding sales.

Meanwhile, Samsung’s mobile business was the second-largest contributor to operating profit with 2.66 trillion won. Despite the chip shortage, the business unit saw growth from increases in sales of its premium smartphones, such as foldable phones and the Galaxy S series, as well as its PC products, the company said. Profitability was, however, impacted by marketing expenses on foldable phones, Samsung said.

The company’s display panel business also contributed 1.32 trillion won to the quarterly operating profit figure from high demand for mobile panels from its key customers, a likely reference to Apple and Samsung’s mobile business, which buy OLED panels and foldable panels, respectively, from the display panel business unit.

Samsung’s consumer electronics businesses recorded 700 billion won in operating profit during the quarter. The businesses saw fading effects of pent-up demand for TVs and home appliances, but the tech giant said it responded by improving product mix and operational efficiency to protect its bottom line.

Looking at Samsung’s logic chip and foundry unit, it recorded its highest quarterly revenue to date thanks to high demand. The company’s total capital expenditures in 2021 stood at 48.2 trillion won, with 43.6 trillion won put into its chip facilities.

For 2022, Samsung said it expected demand for IT products to recover and challenges from supply chain issues and the COVID-19 pandemic to persist. It added it would focus on offering premium products in both components and products in light of this environment.

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