Record profits and a stock split show chip market’s strength

Samsung Electronics is surging and shareholders are being rewarded.

After the Korean tech giant reported a record annual profit of $50.2 billion this morning, it also announced a 50:1 stock split, the company’s first ever, for existing shareholders, who had already received $5.4 billion in annual dividends.

The stock split announcement was spurred by the news that Samsung has now passed Intel as the world's largest component memory chip supplier by revenue, with $69 billion in sales in 2017. The company said in its earnings statement it expects demand for semiconductors to remain strong in 2018, as it rides out the current chip “super-cycle.”

The stock split took Wall Street by surprise but will likely spur further investment by supplying the market with many more available shares.

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Samsung’s overall Q4 profit increased 64 percent, and while its mobile unit saw a slight decline in profit, the new flagship Galaxy S9 smartphone, launching in February, is expected to spur much demand for replacement sales.

Intel, the world's largest chip supplier for the past 25 years, also reported record profits for the year, on $63 billion in chip sales in 2017, demonstrating the extraordinary demand in the market for component chips. While Intel processors still dominate the computer and PC market, Samsung's growth has come in the market for memory chips for smartphones and other portable devices — a market that Intel invented, then abandoned, and again recently re-entered.

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