The Company posted KRW 76.57 trillion ($63.5 billion) in consolidated revenue, a quarterly record and KRW 13.87 trillion in operating profit in the quarter ended December 31, 2021. For the full year, it reported KRW 279.6 trillion in revenue, a new historic high and KRW 51.63 trillion in operating profit.
The fourth quarter revenue growth was driven mainly by the finished product businesses, with expanded sales of premium smartphones, including foldable phones, as well as TVs and home appliances. Operating profit declined from the previous quarter due to a special bonus payment to employees, but rose from a year earlier, driven by the semiconductor businesses.
Earnings at the Memory Business decreased from the prior quarter as prices fell to a certain extent and bit growth came in below the Company’s guidance. The Foundry Business posted a new record for quarterly revenue, while profitability decreased slightly from the previous quarter due to a rise in costs related to ramping up advanced process nodes.
The Display Panel Business saw earnings continue to improve for mobile panels, while losses in large panels widened due to price declines in LCDs and costs related to QD displays.
Revenue of the Mobile eXperience (MX) Business increased slightly led by sales of premium products such as foldable phones and Device Ecosystem products, while profit declined quarter-on-quarter as marketing expenses increased. The Networks Business results improved from the prior quarter as revenue grew for both domestic and global businesses.
The CE businesses posted record quarterly revenue due to robust sales of premium products, but profit declined slightly quarter-on-quarter amid rising costs.
The strength in the US dollar against the Korean won offset the weakness in major emerging currencies, leading to a positive impact of approximately KRW 300 billion on operating profit compared to the previous quarter.
In the first quarter, the Memory Business will focus on maximizing the quality of the business portfolio via higher sales of advanced node products to support the server and PC demand recovery, although lingering uncertainties are likely to persist. The System LSI Business will look to supply essential SoCs and CISs for key customers’ flagship products, while the Foundry Business will seek to expand supply by improving production and yield at advanced processes.
In the Display Panel Business, mobile displays is expected to deliver improved results year-on-year, driven by new smartphone releases and an expansion of the foldable display customer base. In large panels, losses are likely to be partially mitigated with the mass production of QD displays.
The MX Business is expected to deliver revenue and profit growth despite supply constraints, led by new flagship model releases and higher sales of mass market 5G smartphones as well as tablets and wearables. For the Networks Business, the Company aims to win new opportunities from European and other global customers.
The Visual Display and Digital Appliances businesses will seek to improve profitability by focusing on sales of premium products and expansion of new-category products and the portion of online sales.
In 2022, amid expectations of a recovery in global IT demand, the Company’s component businesses will increase production of advanced processes and enhance leadership in next-generation products and technology. In the finished product businesses, the Company will strengthen the premium segment lineup and create new user experiences by enhancing connectivity and synergies between devices. However, challenges associated with supply issues and COVID-19 are likely to persist.
In the Memory Business, demand is expected to grow as enterprises ramp up IT investments while the Company will expand supply of high-performance products and increase application of industry-leading EUV technology to solidify the cost competiveness and market leadership. The System LSI Business will reinforce the lineup of SoCs and the Foundry Business aims to outpace market growth by extending technology leadership with mass production of the 1st generation GAA process.
For the Display Panel Business, demand for OLED is expected to increase with the higher penetration of 5G and growth of the foldable market. For large panels, the Company will work to secure technology leadership in the premium segment with QD displays while closing the LCD production line as planned.
The MX Business aims to increase market share by focusing on innovations in flagship products and providing a differentiated user experience. The Company will also expand sales of Device Ecosystem products by enhancing the value delivered to customers. For the Networks Business, the Company will focus on capturing demand for 5G networks and winning new global customers.
For Visual Display and Digital Appliances, the Company will further solidify market leadership and seek growth by continuing to expand sales of premium products, such as Neo QLED and Bespoke, and also by strengthening sales of Lifestyle TVs and new home appliance products.
The Company’s capital expenditures in 2021 reached a total of KRW 48.2 trillion, including KRW 43.6 trillion for semiconductors and KRW 2.6 trillion for displays. Spending on memory was concentrated on capacity expansions and process migrations at fabs in Pyeongtaek and Xi’an to address the demand for advanced nodes, including EUV-based 15-nanometer DRAM and 6th generation V-NAND. Foundry expenditures were focused on capacity expansions for 5-nanometer EUV nodes. For displays, investments were centered on mobile modules and QD displays. ■