|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's range||45.25 - 45.50|
|52-week range||45.25 - 45.50|
|Beta (5Y monthly)||0.91|
|PE ratio (TTM)||20.18|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg) -- Samsung Electronics Co. missed analyst estimates for the fourth quarter and warned profitability will likely decline this quarter, citing weakness in its memory chip business and challenges with currency fluctuations.South Korea’s biggest company reported net income in the three months ended December of 6.45 trillion won ($5.84 billion), missing the 7.3 trillion won average of estimates compiled by Bloomberg. Shares fell as much as 2.8% in Seoul on Thursday.Samsung, the world’s largest maker of memory chips and displays, struck a cautious tone that stood in contrast to that of many technology companies benefiting during the coronavirus lockdowns. Just hours earlier, Apple Inc. and Facebook Inc. reported financial results that handily exceed estimates.“In the first quarter, we expect overall profitability to decline due to relative weakness in the memory and display businesses,” said Ben Suh, executive vice president of investor relations, during a call with investors. In the memory business, Samsung’s most important profit engine, “results are likely to weaken due to currency effects and continued costs associated with new fab ramp up.”Operating profit for the semiconductor unit was 3.85 trillion won in the fourth quarter, short of the 4.62 trillion estimate from analysts. The company said it expects a recovery in the business in the first half.In the smartphone business, Samsung struggled in the holiday period as Apple introduced its first 5G-capable iPhones and Chinese rivals put up fierce competition. The Cupertino, Calif.-based company took over the No. 1 position in the fourth quarter, ahead of Samsung and China’s Xiaomi Corp., market research firms said on Thursday.With a lot of good devices on the market, “there is only so much that Samsung can grab out of it,” said Kiranjeet Kaur, research manager at IDC.Investors had anticipated Samsung could increase its dividend payout substantially, in part because the founding Lee family faces an enormous inheritance tax bill. Instead, the company said it would continue to return 50% of free cash flow to shareholders between 2021 and 2023, although its annual dividend payout will increase slightly to 9.8 trillion won.The results come just days after Samsung’s de-facto leader, billionaire heir Jay Y. Lee, was sent back to prison on bribery charges. Although professional managers lead the company’s operating units, Lee has played a central role in major strategic decisions.The company signaled it will continue to press ahead with critical deals and investments. Samsung will use its capital to expand the capacity of its foundry business, which fabricates chips for clients like Nvidia Corp., to meet demand and overcome current supply shortages. It will also invest in facility expansions and “meaningful” acquisitions, the company said.“For the last few years, we have been evaluating possible M&A opportunities very carefully and have made significant progress in terms of preparation,” Choi Yoon-ho, chief financial officer of Samsung, said during the earnings call. “Although it is difficult to pinpoint a specific timing due to uncertainties in the internal and external business environment ... we are optimistic of carrying out meaningful M&A activities during this term.”Read more: Samsung Surges to New High on Strong Memory Market OutlookAnalysts including Yungsan Choi of Ebest Investment & Securities have been anticipating a long-awaited rebound in memory chip prices due to demand for servers and more powerful 5G smartphones. Component supplier Murata Manufacturing Co. and chipmaker MediaTek Inc. both anticipate more than half a billion 5G handsets to be shipped this year.Chipmakers Intel Corp. and Micron Technology Inc. gave a bullish forecast for the first quarter of this year on continued demand for computers and phones that enable working and studying from home. Taiwan Semiconductor Manufacturing Co. is planning another record-breaking year of investment with as much as $28 billion set aside to expand and improve its production capacity at a time of silicon supply shortages affecting everyone from global automakers to mobile tech giants like Apple and Qualcomm Inc.Samsung’s contract chip manufacturing is expected to expand with the addition of Intel as a customer. The two companies have discussed development and production of Intel’s mainboard chipsets over the last two years and Samsung will produce the chipset at its Austin, Texas plant starting from this quarter, Meritz Securities said in a note.Samsung Is Said to Mull $10 Billion Texas Chipmaking PlantThe existing Austin fab is capable of operating on a 14-nanometer process. With rising expectations of growth in the foundry market, Samsung is considering building a cutting-edge logic chipmaking plant in the region that would be capable of fabricating chips as advanced as 3nm in the future, Bloomberg News reported earlier.“Regarding investments including building a fab in the U.S., we haven’t made a decision yet,” said Shawn Han, senior vice president of the semiconductor business. “Due to the nature of foundry business that requires timely and efficient responses to customers’ demand, we routinely review capacity expansions. We continue to study ways to optimize operations at fabs in all regions from Giheung, Hwaseong to Austin.”(Updates with executive comment in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Advanced Micro Devices Inc. gave an upbeat forecast, reflecting strong demand for its chips and gains against rival Intel Corp.First-quarter revenue will be about $3.2 billion, plus or minus $100 million, Santa Clara, California-based AMD said Tuesday. That compares with an average analyst estimate of $2.73 billion. For 2021, the company projected a sales increase of 37%, well ahead of Wall Street expectations.AMD has struggled for decades to make sustainable gains against Intel, the world’s largest chipmaker. However, the smaller company has revamped its products and outsourced production, helping it create processors that match or exceed the performance of Intel’s offerings. That has spurred early market share gains and a surge in AMD shares in recent years.Lisa Su, AMD’s chief executive officer, faced questions on whether she can get enough chips to meet demand and how much more profitable the company could be if it can pull this off.“Overall demand has been high in 2020 and exceeded our plans,” she said in an interview. “All of our businesses are firing on all cylinders.”AMD’s 2021 forecast takes into account tight supply in the first half of the year. Profitability is increasing and margin expansion will depend on which market is growing faster, she said. AMD’s profit margins aren’t being squeezed higher production costs or price cuts, she added.In addition to competing with Intel in processors for personal computers and servers, AMD supplies graphics chips used in Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation. New versions of these video game consoles went on sale during the recent holiday period, raising expectations for this part of AMD’s business, which rivals Nvidia Corp.AMD’s chips are made by Taiwan Semiconductor Manufacturing Co., which has better production technology than Intel. TSMC also supplies Apple Inc., Qualcomm Inc., Nvidia and many other technology companies, and the Taiwanese company is struggling to keep up with demand.Last week, Intel reported better-than-expected earnings and gave an upbeat forecast for the first quarter. Strong demand for laptops to support working and studying from home has fueled growth and will continue in the first half of 2021, Intel said.AMD reported fourth-quarter net income of $1.78 billion, or $1.45 a share, compared with $170 million, or 15 cents, in the same period a year earlier. Revenue rose 53% to $3.2 billion. Profit, excluding certain items, was 52 cents. Analysts were looking for profit of 47 cents on sales of $3 billion. Net income was boosted by a tax benefit of $1.3 billion in the quarter, AMD said.AMD shares slipped about 1% in extended trading. The stock has soared almost 90% in the past year.(Updates with CEO comments in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- As China pushes the world to avoid official dealings with Taiwan, leaders across the globe are realizing just how dependent they’ve become on the island democracy.Taiwan, which China regards as a province, is being courted for its capacity to make leading-edge computer chips. That’s mostly down to Taiwan Semiconductor Manufacturing Co., the world’s largest foundry and go-to producer of chips for Apple Inc. smartphones, artificial intelligence and high-performance computing.Taiwan’s role in the world economy largely existed below the radar, until it came to recent prominence as the auto industry suffered shortfalls in chips used for everything from parking sensors to reducing emissions. With carmakers including Germany’s Volkswagen AG, Ford Motor Co. of the U.S. and Japan’s Toyota Motor Corp. forced to halt production and idle plants, Taiwan’s importance has suddenly become too big to ignore.U.S., European and Japanese automakers are lobbying their governments for help, with Taiwan and TSMC being asked to step in. Chancellor Angela Merkel and President Emmanuel Macron discussed the potential for shortages last year and agreed on the need to accelerate Europe’s push to develop its own chip industry, according to a French official with knowledge of the matter.The auto industry’s pleas illustrate how TSMC’s chip-making skills have handed Taiwan political and economic leverage in a world where technology is being enlisted in the great power rivalry between the U.S. and China -- a standoff unlikely to ease under the administration of Joe Biden.Taiwan’s grip on the semiconductor business -- despite being under constant threat of invasion by Beijing -- also represents a choke point in the global supply chain that’s giving new urgency to plans from Tokyo to Washington and Beijing to increase self-reliance.By dominating the U.S.-developed model of outsourcing chip manufacture, Taiwan “is potentially the most critical single point of failure in the entire semiconductor value chain,” said Jan-Peter Kleinhans, director of the technology and geopolitics project at Berlin-based think tank Stiftung Neue Verantwortung. The Trump administration exploited that pinch point to deny Beijing access to technology. By banning access to all U.S. chip technology including design, it was able to cut off the supply of semiconductors from TSMC and other foundries to Huawei Technologies, hobbling the advance of China’s biggest tech company.It also negotiated with TSMC to establish a $12 billion chip fabrication plant in Arizona. South Korea’s Samsung Electronics Co. is set to follow, with a $10 billion facility in Austin, Texas.The “CHIPS for America Act” introduced to Congress last year aims to encourage more plants to be established in the U.S. Michael McCaul, a Texas Republican, plans to reintroduce the bipartisan bill this year with a view to securing $25 billion in federal funds and tax incentives. McCaul said in a statement he’s working with colleagues in the House and Senate “to prioritize getting the remaining provisions of CHIPS signed into law as quickly as possible.”News that Intel Corp., the onetime industry leader, was considering outsourcing production of some chips to TSMC under its former CEO underscored the need for a U.S. player that can fabricate at the leading edge, said a member of the Foreign Affairs Committee staff who is not authorized to speak publicly.The European Union aims to bolster the bloc’s “technological sovereignty” through an alliance armed initially with as much as 30 billion euros ($36 billion) of public-private investment to raise Europe’s share of the global chip market to 20% (without a target date) from less than 10% now.It’s also encouraging Taiwan to increase investments in the 27-nation bloc, with some success. GlobalWafers Co. -- based in TSMC’s hometown of Hsinchu -- just boosted its offer for Germany’s Siltronic AG to value the company at 4.4 billion euros, an acquisition that would create the world’s largest silicon wafer maker by revenue.That’s not to say Taiwan is the only player in the semiconductor supply chain. The U.S. still holds dominant positions, notably in chip design and electronic software tools; ASML Holding NV of the Netherlands has a monopoly on the machines needed to fabricate the best chips; Japan is a key supplier of equipment, chemicals and wafers.But as the emphasis shifts to ever smaller, more powerful chips that require less energy, TSMC is increasingly in a field of its own. And it’s helped Taiwan form a comprehensive ecosystem around it: ASE Technology Holding is the world’s top chip assembler, while MediaTek has become the largest smartphone chipset vendor.Tokyo, too, is attempting to attract TSMC to set up in Japan. With 110 billion yen ($1 billion) earmarked last year for R&D investment and another 90 billion yen for 2021, some of that may go to a TSMC facility, which reports have said the company is considering setting up in Japan.“TSMC is becoming more and more dominant,” said Kazumi Nishikawa, an official working on technology issues at Japan’s Economy Ministry. “This is something everybody in the chip industry must find a way to deal with.”China, in its five-year plan presented in October, is channeling help to the chip industry and other key technologies to the tune of $1.4 trillion through 2025. Yet even that kind of money doesn’t negate the need for Taiwan. Indeed, China has long tapped the island for chip-making talent; two key executives at China’s top chipmaker, Semiconductor Manufacturing International Corp., used to work at TSMC: co-Chief Executive Officer Liang Mong Song and Vice Chairman Chiang Shang-yi.But with Washington stymieing China’s progress, there is also speculation that Beijing could resort to stealing chip IP, with Taiwan at the heart of those endeavors.Taiwanese cyber security firm TeamT5 has observed a steady increase in attacks on the island’s chip industry corresponding to the tightening of U.S. export controls on China. While it’s not always possible to know if these are Chinese state actors, “they are all attacking the Taiwanese semiconductor industry,” Shui Lee, a T5 cyber threat analyst, said.Fellow analyst Linda Kuo said the Taiwanese government was alarmed by a ransomware attack on TSMC in 2018 and had announced plans for some $500 million to help the industry become more aware of cyber security issues.The greater worry is that TSMC’s chip factories could become collateral damage if China were to make good on threats to invade Taiwan if it moves toward independence.TSMC's capital spending of as much as $28 billion for this year suggests it's going to stay out in front.“Taiwan is the center of gravity of Chinese security policy,” said Mathieu Duchatel, director of the Asia program at the Institut Montaigne in Paris. Yet while Taiwan’s status in the global chip supply chain is a “huge strategic value,” it’s also a powerful reason for Beijing to stay away, said Duchatel, who’s just published a policy paper on China’s push for semiconductors.Assuming Taiwanese forces were to be overwhelmed during an invasion, “there is no reason why they would leave these facilities intact,” he said. And preserving the world’s most advanced fabs “is in the interests of everyone.”For all the moves to reel back domestic chip fabrication, it’s optimistic to think the supply chain for such a complex product as semiconductors could change in short order, Peter Wennink, ASML chief executive officer, told Bloomberg TV. “If you want to reallocate semiconductor build capacity, manufacturing capacity, you have to think in years,” he said.In the meantime, geopolitics means chip shortages could become a more regular occurrence, according to Joerg Wuttke, president of the EU Chamber of Commerce in China.“This is going to move on to the point where actually because of export controls, because of governmental intervention, there will be all of a sudden supply chain disruptions not just because of capacity problems,” he told Bloomberg Television. “So better get prepared.” For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.