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Samsung Sees Stronger Profits as Smartphone Gains Offset Chip Shortage

Analysts estimate strong smartphone and consumer electronics sales will offset a slump in semiconductor profit at the world's biggest chipmaker.

Samsung Electronics forecast stronger-than-expected first-quarter profit Wednesday as an expected boost from smartphone and TV sales offsets the ongoing shortage in global semiconductor supplies. 

Samsung, the world's biggest memory chipmaker, said it sees operating profits for the three months ending in March of around 9.3 trillion Korean won ($8.3 billion), a 44% increase from the same period last year and a 3% improvement from the previous quarter. Group revenues, Samsung forecast, should come in between 64 trillion and 66 trillion Korean won, a 17% advance from last year.

Samsung will publish a detailed second-quarter earnings report during the final days of the month, but analysts at BMO Capital Markets expect the group's chip division to contribute around 3.53 trillion Korean won to its bottom line, with revenues in the region of 17.7 trillion.

Daiwa analysts, however, forecast that revenues from Samsung's mobile division will get a lift from earlier launches of the G21 and A-series smartphones, with work-from-home shifts supporting consumer electronics sales. 

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Samsung shares ended the Wednesday session in Seoul 0.47% lower at 85,600 Korean won each, a move that pegs the stock's year-to-date advance at around 5.7%.

Last month, Samsung warned that the global shortage in semiconductor supplies has created a "serious imbalance" that is affecting production in everything from smartphones to electric vehicles. 

The global coronavirus pandemic's impact in semiconductor production has meant the industry is unable to keep pace with neither current nor forecast demand, creating a marked shortage in new supplies that has slowed investment plans for carmakers such as Volkswagen  (VWAGY) - Get Volkswagen AG ADR Report, General Motors  (GM) - Get General Motors Company Report and Ford  (F) - Get Ford Motor Company Report and game console makers such as Sony Corp.