Samsung Electronics’ semiconductor unit saw a 15.5% decline in operating profit in the first quarter, but the company expects a significant improvement in the second quarter.
Part of Samsung’s 1Q semi business profit decline was blamed on a production disruption at its Austin, Texas, fab due to a major power outage in mid-February when the state was crippled by an ice and snowstorm.
Profit for the semi segment dropped to 3.37 trillion KRW ($3.04 billion US) from 3.99 trillion KRW a year earlier even as revenues increased in the first quarter to 19.01 trillion KRW ($17.2 billion) from 17.64 trillion KRW a year earlier.
For Samsung’s separate Mobile Communications Business, the company warned of “diminishing new product effects” for its flagship Galaxy S21 Ultra smartphone in the second quarter and component supply shortages that are likely to weaken revenues.
Still, the company sees continued expansion of the 5G market in the second half of 2021 and expects to strengthen its leadership in premium smartphones by popularizing its foldable smartphones.
Due to the Texas storm, the Samsung Line S2 fab in Austin suspended operations on Feb. 16 along with nearby fabs operated by NXP Semiconductors and Infineon Technologies. Samsung was making chips for Qualcomm and Tesla for their 5G radio chips and vehicles, according to analysts at TrendForce.
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Samsung reported Thursday that the Austin fab returned to normal operations as of the start of the second quarter on April 1. The company did not state the total earnings decline for its foundry businesses, including the Austin fab, but said it will expand supply in the second half of the year through the start of mass production at Pyeongtaek Line 2 in South Korea.
The company’s semiconductor segment also saw a slight profit decline in its memory business with a downward trend in NAND prices. DRAM demand remained solid with increased penetration of 5G smartphones and strong PC demand with increased online activities.
Server demand significantly jumped year-over-year, mainly with solid demand from data centers and increasing adoption of a new server CPU, but Samsung did not specify the amount.
Samsung’s semiconductor revenues rank second worldwide behind Intel. In the first quarter, Intel reported revenues of $19.7 billion, compared to Samsung’s revenues converted to US dollars of $17.2 billion.
The semiconductor business at Samsung normally makes up about 30% of its total revenues, with the remainder from mobile communications, display panels, networks, and consumer electronics.
For all of 2020, Intel reported revenues of $77.87 billion while Samsung’s semiconductor business revenues reached $65.7 billion. Samsung’s entire business revenues in 2020 reached $213.7 billion when all units are included and reached 65.39 trillion KRW ($59 billion) for 1Q 2020, a record for the first quarter.