Business
Samsung warns supply chain upsets may hit chip demand, profit at 3-year high
Published by maria gbaf
Posted on October 28, 2021
4 min readLast updated: January 29, 2026
Global Banking & Finance Review®
Company
Published by maria gbaf
Posted on October 28, 2021
4 min readLast updated: January 29, 2026
Samsung warns of supply chain issues affecting chip demand, despite reporting its highest quarterly profit in three years. Server and PC chip demand remains strong.
By Joyce Lee and Heekyong Yang
SEOUL (Reuters) – Samsung Electronics Co Ltd said on Thursday it expects component shortages to affect chip demand from some customers in the final three months of the year, after reporting its highest quarterly profit in three years.
The warning comes as producers of goods from televisions to cars have faced a host of supply chain issues ranging from a shortage of logic chip parts, manpower shortages, logistics snarls, and delays at parts plants due to power cuts in China.
“A longer-than-expected component supply issue may need to be monitored” for potential impact on devices that use memory chips, Samsung said, although it added there was “strong fundamental demand” for server chips.
“There is much uncertainty due to various macro issues including the effect of ‘back-to-normal’, component supply and raw material price hikes,” said Han Jin-man, executive vice president of memory business.
“But… component supply issues seem to stem more from mismatches in supply chain management rather than from an absolute lack of supply… So the situation may improve from the second half of next year.”
Samsung said demand for server DRAM chips, which temporarily save data, and NAND flash chips that serve the data storage market, is expected to stay robust in the fourth quarter due to expansion of data centre investments, while personal computer manufacturing growth is expected to hold in line with the previous quarter.
Although supply chain issues could limit demand from some mobile chip customers in the fourth quarter, demand for server and personal computer chips is expected to be robust in 2022 despite uncertainties, it said.
Samsung said falling memory chip prices were not a huge cause of concern because the chips are now used in a wider variety of devices than just personal computers, making cyclical price fluctuations weaker and shorter than in the past. Chipmakers were also carrying lean inventory levels, leaving room for a build-up without being forced to sell at a low price.
Falling memory prices have weighed on the company’s shares as investors expect prices to have peaked in the third quarter before falling until mid-2022.
“There seems to be a clear gap in memory price outlook between chipmakers and the market. Companies are expressing a firm will to not sell chips at low prices,” said Park Sung-soon, analyst at Cape Investment & Securities.
“However, even server chip demand is not guaranteed at this point as the component supply issues are also affecting them.”
Analysts expect Samsung’s fourth quarter earnings to be level or below its third quarter result, largely depending on memory chip prices.
Smaller rival SK Hynix on Tuesday struck a more bullish note than U.S. peers and forecast steady demand for memory chips. Earlier, chipmakers Intel and Micron had said shortages of some components were stopping their customers from shipping PCs.
THREE-YEAR HIGH
The world’s top maker of memory chips and smartphones posted a 28% jump in operating profit in the July-September quarter to 15.8 trillion won ($13.48 billion) on the back of an 82% on-year profit surge in its chip business, where earnings rose to 10.1 trillion won.
Rising memory chip prices, plus a jump in profitability at Samsung’s chip-contract manufacturing business boosted the chip business‘ operating profit.
Operating profit at Samsung’s mobile division slid about 24% on-year to 3.36 trillion won on the third quarter, as sales of Samsung’s new foldable smartphones were tempered by marketing costs.
Net profit rose 31% to 12.3 trillion won. Revenue rose 10% to a record 74 trillion won.
Samsung’s shares rose 0.3% in afternoon trade on Thursday, compared with the wider market’s 0.2% rise. It shares have fallen about 13% year-to-date.
($1 = 1,172.0500 won)
(Reporting by Joyce Lee and Heekyong Yang; Editing by Richard Pullin)
The article discusses Samsung's warning about supply chain issues affecting chip demand and its highest quarterly profit in three years.
Supply chain issues include shortages of logic chip parts, manpower shortages, and logistics delays.
Demand for server and PC chips is expected to remain strong, but mobile chip demand may be limited.
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