Samsung, chip hoarding ahead of 'duty war' supports accounts

Samsung Electronics released preliminary guidance on its results for the first quarter of the year, positively surprising the market despite a slight drop in operating profit (-0.2%). The South Korean giant estimates profits of 6.6 trillion won (around USD 4.9 billion), which - compared to 6.61 trillion won in the same period last year and 6.49 trillion won in the previous quarter - is well above analysts' consensus of 5.7 trillion won.

The move comes amidst a rebound in the semiconductor sector, after a 2023 that had put a strain on the group's margins, helped by falling memory chip prices and a global glut. According to Samsung, the group's quarterly revenue probably rose 9.8% to 79 trillion won.

Supporting the accounts was also a contingent but relevant factor: the increase in advance orders from customers, particularly from China, who are accelerating their procurement operations to protect themselves against possible disruptions in trade flows linked to tensions between Washington and Beijing. A 'duty preparation' strategy that is having a concrete impact on volumes.

Attention now turns to the full numbers, which are expected later this month, when the company will announce details on revenues by sector. Investors are also awaiting indications on the production capacity of high-bandwidth memory (HBM) chips, an area in which Samsung aims to strengthen its position vis-à-vis SK Hynix, which is now seen as having an advantage.

Today's rising share price will now have to reckon with the evolution of geopolitical tensions and the solidity of the recovery in the semiconductor market, which is still subject to volatility.