Even if you weren't living under a foundry for the last year and a half, you probably noticed that there is a major chip shortage taking place across the globe. Prices on everything from electronics to autos have risen in response, given the tremendous demand for silicon and the lack of supply. However, those shortages are turning into big profits for some semiconductor giants, like Samsung Electronics (OTC:SSNLF).
By the numbers: The world's largest memory chip and smartphone maker estimated a 28% jump in its third-quarter operating profit. At 15.8T won ($13.3B), it would be Samsung's highest quarterly profit since the third quarter of 2018. The chip division's operating profit could even be 79% higher from a year earlier, according to analysts, with semiconductors accounted for about half of Samsung's operating profit in the first half of the year. Samsung is planning to invest $17B in a new Texas chip plant.
It's not all rosy. Samsung shares have slid more than 20% from their January peak due to concerns that the semiconductor industry could be entering a prolonged downturn. The stock "is under pressure due to worries that the semiconductor cycle will peak out and the company’s pricing power could be undermined by increasing inventories of customers," noted Kim Dong-won, analyst at KB Securities. Losses accelerated in September, when rival Micron Technology (NASDAQ:MU) said its memory chip shipments would slip in the near term because of part shortages.