Samsung reports 23 percent rise in quarter 2 profit due to solid chip sales

Samsung Electronics Co Ltd reported a 23 percent rise in quarter 2 operating profit on Tuesday, beating analysts’ estimates on solid chip sales to data centers catering for a work-from-home economy amid the coronavirus outbreak.

The company further said, decreased demand for smartphones and TVs is being covered, while one-off gains from its display business have also boosted the profits, which counts Apple Inc. as a customer.

Samsung said operating profit was nearly KRW 8.1 trillion (around Rs. 50,708 crores) in the quarter ended June, more than KRW  6.4 trillion (around Rs. 40,058 crores) analyst predicted by Refinitiv SmartEstimate. Making it the highest quarterly profit since the fourth quarter of 2018.

Revenue nearly decreased by 7 percent to KRW 52 trillion (around Rs. 3.25 lakh crores) from last year, Samsung shared only limited data in the regulatory filing and said to release its detailed earnings later this month.

Work-from-home orders and an increase in online learning are supporting chip demand during this ongoing COVID-19 pandemic and raising DRAM memory chip prices. US DRAM supplier Micron Technology predicts strong quarterly revenue the previous month.

Park Sung-soon an analyst at Cape Investment & Securities said “Chip demand was stronger than expected due to the COVID-19 pandemic.”

Samsung

Analysts further said the one-off display boost showed a payment from Apple, with the US company struggling to meet agreed shipment targets as iPhone sales are severely hit due to the COVID-19 pandemic.

The payment was estimated around KRW 1 trillion (nearly Rs. 6,260 crores), greater than a similar KRW 800 billion (nearly Rs. 5,009 crores) payment the last year, they said.

Analysts further said, maybe, the handset and TV business are doing better than expected due to decreased marketing costs and as stores and factories restarted operations globally as countries loosened lockdowns.

CW Chung, Nomura head of research in Korea said “the damage from the COVID-19 outbreak was less severe than the market had expected earlier.”

Analysts also warned that hikes in memory chip prices may not continue in the next half of the year as data center customers are likely to be conservative in stockpiling chips.

Meanwhile, the prices jumped 14 percent on average within the quarter, they were motionless in the month of June against May, data from DRAMeXchange showed.

Shares of Samsung Electronics decreased by 0.9 percent, against a 0.4 percent increase in the wider market.

However, Samsung shared only limited data in Tuesday’s regulatory filing and said to release its detailed earnings later this month.

 

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