Samsung Electronics Rides Strong Chip Prices and Demand to Flag 53 Percent Jump in Q2 Profit, Tops Estimates


Samsung on Wednesday reported a possible 53 p.c leap in second-quarter working revenue, beating market estimates on the again of robust chip costs and demand regardless of decrease smartphone gross sales.

The preliminary result’s up 33 p.c from the primary quarter and underscores the hovering demand for chips that has depleted stockpiles amid a pandemic-led shopper urge for food for electronics and recovering funding in knowledge centres.

The world’s largest reminiscence chip and smartphone maker stated revenue for the quarter ended June 30 was doubtless SKW 12.5 trillion (roughly Rs. 82,025 crores), nicely above a Refinitiv SmartEstimate of  SKW 11.3 trillion (roughly Rs. 74,145 crores). If confirmed later this month, it might be the tech large’s largest second-quarter revenue 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,” stated Park Sung-soon, analyst at Cape Investment & Securities.

For the second quarter, Samsung’s chip division revenue doubtless jumped by a fifth or extra from a 12 months earlier, analysts stated, helped by robust memory-chip costs and demand for shopper electronics and from knowledge centre clients.

Samsung’s reminiscence chip shipments, particularly for DRAM chips extensively used in servers, cellphones, and different computing units, had been bigger than anticipated, contributing to chip earnings that dwarfed a steep quarter-over-quarter fall in smartphone shipments.

Improved yield in cutting-edge 1z nanometre DRAM chip manufacturing utilizing ASML’s excessive ultraviolet lithography (EUV) machines additionally doubtless lessened prices from the primary quarter, analysts stated.

Profits at Samsung’s chip contract manufacturing and logic chip design companies had been doubtless to have improved too as operations at a storm-hit manufacturing unit in Texas returned to regular, analysts stated.

“One of the most-anticipated elements in the earnings call later this month is how much the chip contract manufacturing business has progressed in competitiveness, and the current status of foundry customers and orders,” stated Lee Won-sik, analyst at Korea Investment & Securities.

“Another is what changes Samsung expects in memory chip profitability, as competitors like Micron are said to be narrowing the technology gap (with Samsung),” Lee added.

(*53*) month, U.S. reminiscence chip rival Micron reported a quarterly revenue that beat Wall Street estimates, and forecast current-quarter income above expectations.

Smartphone shipments

Samsung’s smartphone shipments fell to about 59 million in April-June from about 76 million in the primary quarter, in accordance to Shinyoung Investment & Securities, as gross sales of its flagship mannequin launched in the primary quarter slowed.

New COVID-19 outbreaks in areas corresponding to India and Vietnam, in addition to constrained provide of cell processor chips, additionally harm smartphone shipments in the quarter, analysts stated. These situations are doubtless to enhance in the second half, they added.

A one-off achieve for Samsung’s show unit, which analysts stated was a compensation from Apple for beforehand ordering fewer parts than agreed upon, was additionally included in the quarterly revenue.

Revenue rose an estimated 19 p.c from the identical interval a 12 months earlier to SKW 63 trillion (roughly Rs. 4,13,630 crores), Samsung stated.

Samsung shares fell 1 p.c in morning commerce, whereas the broader market fell 0.7 p.c. Samsung shares have traded practically flat to date this 12 months versus a 15 p.c rise in the benchmark KOSPI.

Samsung launched solely restricted knowledge in Wednesday’s regulatory submitting forward of the discharge of detailed earnings figures later this month.

© Thomson Reuters 2021


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