Samsungs Profits Rose in 2020 Despite the Pandemic
Heres something that shouldnt surprise anyone whos been paying attention but probably will anyway. Samsung made more money during the pandemic than before it.
The South Korean tech giant reported that profits for 2020 rose year over year despite COVID-19 wreaking havoc on pretty much every other aspect of the global economy. Their semiconductor business was the big winner – up 12% to 72.86 trillion won. Thats roughly $65 billion from chips alone.
Let me explain why this makes perfect sense even though it sounds counterintuitive.
When everyone got sent home to work remotely what did they need? Laptops. Monitors. More storage. Better phones for video calls. Data centers scrambling to handle the load from everyone streaming Netflix and Zooming simultaneously. All of that requires memory chips and Samsung makes more memory chips than anyone else on the planet.
The second quarter of 2020 saw operating profit jump 23% year over year to 8.15 trillion won. That was actually higher than analysts expected. They were predicting a decline. Instead Samsung posted growth because they correctly anticipated the demand shift.
Now the mobile division had a rougher time initially. Global smartphone sales cratered in Q1 2020 – down more than 20% according to Gartner. People werent exactly running to phone stores during lockdowns. But Samsung pivoted hard to online sales and managed to minimize the damage.
By years end the mobile business was up 6% to 96.02 trillion won in revenue. Not bad considering the circumstances.
Chip manufacturers across the board saw similar demand surges. But Samsung had the scale and diversification to capitalize better than most.
The company acknowledged in their Q4 report that the strong Korean won actually hurt their results. Currency fluctuations knocked about 1.4 trillion won off their semiconductor and display earnings compared to Q3.
The pandemic accelerated digital transformation by years. Samsung was positioned to capture that demand. And they did.
Source: Samsung Global Newsroom
