Samsung Electronics warned {that a} stronger South Korean gained and better manufacturing prices would hit its first-quarter earnings, because the tech group expressed optimism for a worldwide restoration in demand in 2021.

The forecast is the primary from Samsung since Lee Jae-yong, its chief, was sent back to prison, a growth that has elevated uncertainty over the long run route of the world’s largest maker of pc chips, smartphones and digital shows.

The South Korean firm on Thursday reported a 26.4 per cent year-on-year rise in fourth-quarter web revenue to Won6.45tn ($5.78bn). The earnings, which had been under the Won7.3tn forecast by analysts polled by Bloomberg, had been affected by an appreciation within the gained towards the greenback.

“Wanting forward, Samsung Electronics expects total revenue to weaken within the first quarter of 2021,” the corporate stated, citing the power of the Korean foreign money and prices of recent manufacturing traces. Nonetheless, it stated demand for cellular merchandise and knowledge centres remained sturdy.

The downbeat short-term forecast contrasted with rivals’ optimistic outlook. Each Intel and Micron Know-how had been bullish on the primary quarter because the pandemic continued to gas demand for computer systems and smartphones. TSMC will spend a report of up to $28bn this yr to develop its capability as chip shortages hit international automakers.

Samsung stated its full-year outlook remained shiny nevertheless it was cautious over the influence of resurgences of coronavirus.

Semiconductors, which accounted for almost half of Samsung’s working earnings final yr, are more likely to drive an earnings improve in 2021 as chip prices rise.

“The chip worth improve this yr gained’t be as fast as 2017-18 however we’ll see a gradual rise with a chronic upcycle, which will likely be more healthy,” stated Daniel Kim, an analyst at Macquarie.

Samsung’s foundry enterprise posted report quarterly income within the three months to December, led by robust demand for the chips utilized in 5G cellular know-how and high-performance computer systems, in addition to for picture sensors.

The corporate expects to accumulate extra prospects this yr as chip provide shortages proceed. Analysts have forecast that Samsung will win orders from Intel, which stated in July it was contemplating outsourcing extra of its chip manufacturing.

The corporate expects greater earnings from cellular merchandise within the first quarter after launching new flagship fashions and foldable telephones final week. “In 2021, market demand is more likely to get well to pre-Covid ranges backed by gradual restoration within the economic system and accelerating enlargement of the 5G market,” the corporate stated.

Samsung shares fell almost one per cent on Thursday morning. The inventory worth has risen greater than 40 per cent over the previous yr on expectations of rising demand for semiconductors and better dividends.

The Lee household faces a tax bill of an estimated $10bn following former chairman Lee Kun-hee’s dying in October. Samsung pledged to take care of its coverage of returning half its free money stream to shareholders for the following three years and barely raised its 2021 dividend payout to Won9.8tn.

Samsung stated its ballooning money pile was “a priority in managing the corporate” and it expects “significant M&A” within the close to future. Analysts stated that would assist ease considerations that Lee Jae-yong’s absence would stall massive investments or different strategic strikes.

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