Samsung posted an operating profit of 14 trillion won, up 11% from the 12.57 trillion won a year ago
Samsung posted an operating profit of 14 trillion won, up 11% from the 12.57 trillion won a year ago
South Korea’s Samsung Electronics Co Ltd on Thursday turned its best April-June profit since 2018, based on strong sales of memory chips to server customers, despite calming demand from inflation-hit smartphone makers.
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Shares of the world’s largest memory-chip and smartphone maker rose 2.5% after announcing second-quarter preliminary results, while the broader market gained 1.5%.
Samsung posted operating profit of 14 trillion won ($10.7 billion), up 11% from 12.57 trillion won a year ago, just shy of SmartEstimate’s 14.45 trillion won from Refinitiv. Revenue grew 21% to ₹77 trillion, according to estimates.
Strong quarter for Samsung comes at a time other chip makers have warned A budding chip glute On customers stocking up during the pandemic to meet the high demand for people working from home.
Chipmakers including Micron and Advanced micro-equipment has also recently indicated declining demand. Because red-hot inflation drives down spending.
“Memory chipmakers are expected to build up inventory and increase shipments when prices rise again and demand improves next year,” said Park Sung-soon, an analyst at Cape Investment & Securities.
Specific DRAM Chips PricesUsage across devices and servers, according to data provider TrendForce, fell about 12% last month compared to a year ago. The prices of NAND flash chips used for data storage are also projected to fall by 5% in the July-September period as compared to the previous quarter.
Smartphone demand weak
Rising inflation, worries of recession in major markets, war in Ukraine and China’s COVID-19 lockdown result is Smartphone sales downThat left server chip demand as the only bright spot, analysts said.
He said Samsung’s profits have been shielded as large US tech firms such as Amazon, Microsoft, Alphabet’s Google and Meta, which use a lot of data center services to buy chips to meet cloud demand. are, he said.
Making a case for strong server demand, Taiwanese contract electronics supplier and Apple iPhone maker Foxconn on Monday raised its full-year outlook And said it was optimistic about the third quarter.
A stronger dollar, which hit a 20-year high, may also have helped Samsung’s chip profits in the second quarter.
samsung chip sales are primarily made in dollars, while it reports its gains in the korean won, so a firm greenback translates into higher chip earnings.
Smartphone shipments estimated by Samsung’s mobile business in the second quarter were around 62-64 million, down about 5%-8% from March estimates, Counterpoint Research said, as inflation hit smartphone demand.
Samsung shipped 74 million smartphones in the first quarter.
“This trend is similar for major global smartphone makers, although there is some degree of variation … In particular, the impact on demand for low- and mid-end smartphones seems to be more severe,” said senior analyst Jayne Parks. counterpoint.