The world’s largest memory chip and smartphone maker has hinted at a 53% quarterly profits boost – its best for three years – largely off the back of its booming semiconductor operations
Samsung Electronics say they will see a likely 53% jump in their second-quarter operating profits thanks to strong microchip prices and demand – despite lower smartphone sales.
The preliminary result, announced on Wednesday, is up 33% from the first quarter and underlines the soaring demand for chips that has depleted stockpiles – and halted production lines – amid a pandemic-led consumer appetite for electronics and recovering investment in data centres.
The world’s largest memory chip and smartphone maker said profits for the quarter ended June 30 were likely to be 12.5 trillion won ($11 billion), well above a Refinitiv SmartEstimate of 11.3 trillion won.
Also on AF: China Tech Crackdown Intensifies With Tighter Supervision of Foreign-Listed Firms
If confirmed later this month, it would be the tech giant’s biggest second-quarter profit since 2018.
“Third-quarter profit is expected to be even higher on strong mobile DRAM memory chip prices, and peak seasons for mobile and display businesses,” said Park Sung-soon, analyst at Cape Investment & Securities.
For the second quarter, Samsung’s chip division profits will likely jump by a fifth or more from a year earlier, analysts said, helped by strong memory-chip prices and demand.
Samsung’s memory chip shipments, especially for DRAM chips widely used in servers, mobile phones and other computing devices, were larger than expected, contributing to chip profits that dwarfed a steep quarter-over-quarter fall in smartphone shipments.
SHIPMENTS FALL
Profits at Samsung’s chip contract manufacturing and logic chip design businesses were likely to have improved too as operations at a storm-hit factory in Texas returned to normal, analysts said.
Last month, US memory chip rival Micron Technology Inc reported a quarterly profit that beat Wall Street estimates, and forecast current-quarter revenue above expectations.
Samsung’s smartphone shipments fell to about 59 million in April-June from about 76 million in the first quarter, according to Shinyoung Investment & Securities, as sales of its flagship model launched in the first quarter slowed.
New Covid-19 outbreaks in regions such as India and Vietnam, as well as constrained supply of mobile processor chips, also hurt smartphone shipments in the quarter, analysts said. These conditions are likely to improve in the second half, they added.
SHARES FLAT
A one-off gain for Samsung’s display unit, which analysts said was a compensation from Apple for previously ordering fewer components than agreed upon, was also included in the quarterly profit.
Revenue rose an estimated 19% from the same period a year earlier to 63 trillion won, Samsung said.
Samsung shares fell 1% in morning trade, while the wider market fell 0.7%. Samsung shares have traded nearly flat so far this year versus a 15% rise in the benchmark KOSPI.
Samsung released only limited data in Wednesday’s regulatory filing ahead of the release of detailed earnings figures later this month.
- Reporting by Reuters
Read more:
Samsung lagging on renewable energy pledge, says Greenpeace
Samsung to pour $151bn into chips as it eyes global dominance
