Samsung Guides To Strong Q1 Operating Profit Growth: Does This Have Readthrough For Chip Demand?

South Korean electronics giant Samsung has some positive news for the tech sector, which has struggled in the year-to-date period amid macroeconomic and geopolitical risks.

What Happened: Samsung said it expects first-quarter consolidated sales to come in at 77 trillion won ($63 billion). This compares to the year-ago sales of 65.39 trillion won and fourth quarter's 76.57 trillion won.

The company also preannounced a first-quarter operating profit of 14.1 trillion won, up 50.3% year-over-year and 1.7% higher than in the previous quarter. The operating profit represented the best first-quarter performance since 2018.

It was also more than the 13.3-trillion won consensus estimate compiled by Refinitiv, according to Reuters.

Samsung will release detailed first-quarter results on April 28.

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Why It's Important: The Ukraine crisis has cast a pall of gloom on the tech sector as a whole. An anticipated slowdown in demand amid receding consumer sentiment, component shortages and input cost inflation are all expected to affect both top- and bottom-line of these companies.

Against this backdrop, Samsung's preliminary earnings should come as a relief to the markets, given it is the first major tech company to report.

Samsung reportedly benefited from strong demand for its new smartphone models as well as its server memory chips.

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