By Joyce Lee

SEOUL (Reuters) – Samsung Electronics Co Ltd will likely post a record fourth quarter profit due to robust demand for its server memory chips as well as higher margins in contract production, according to analyst estimates. The world’s largest smartphone and memory chip manufacturer is expected to post an operating profit of 15.2 trillion won (or 12.7 billion), in December according to Refinitiv SmartEstimate. It was calculated by 14 analysts. These estimates are weighted towards those more consistent. This would increase 68% from the 9.05 trillion won one year ago and surpasses by a narrow margin Q4’s record profit of 15.15 billion won.

Samsung (KS) Electronics shares have risen about 12% in two months, in anticipation of higher prices for memory chips this year. This is due to new data centres, demand for streaming video and other services, as well as increased expectations that the price of memory chips will rise.

Jeff Kim, analyst with KB Securities said that “Contrary previous fears, the semiconductor sector is likely to witness demand rise significantly from customers both in memory and non–memory sectors.”

“As December ended, the major North American data center companies such as Amazon (NASDAQ) or Microsoft (NASDAQ), have been steadily increasing their memory chip orders… Samsung’s foundry company appears to have received two years worth of orders up until 2023.

This view was supported by its peer Micron Technology Inc (NASDAQ:)’s stronger-than-expected earnings results in December and its positive forecast for the following quarter.

Analysts said that Samsung’s chip manufacturing business competes with Taiwan Semiconductor Manufacturing Co. (TSMC) and has seen a sharply increased profitability over the past quarter. It now boasts an operating margin of between 10% to 20%, due to higher prices and more deliveries.

The average prediction of five analysts is that Samsung’s total Q4 chip profit would reach 9.7 trillion won. That’s more than twice as much as the previous year’s $3.85 trillion won.

South Korea’s tech giant, Samsung Electronics, will reveal preliminary results Friday.

The easing of component shortages led to an increase in Samsung’s mobile business. Analysts have said that shipments are likely to rise slightly for the Samsung Mobile Business (Mobil), which was just merged with a Device Experience (DX), division with television and home appliances.

Five analysts have estimated that the mobile business would report an operating loss of approximately 3 trillion won. This is up 24% from its previous forecasts.

After Samsung announced that it will temporarily alter operations in Xian NAND manufacturing plants due to COVID-19 restrictions, market participants will tune into Samsung’s complete results this month.

TrendForce data company stated that Samsung’s Xian factory was still producing last week without any significant interruptions.

($1 = 1,193.0000 won)