Samsung Electronics Co yesterday forecast a 23 percent rise in second-quarter operating profit, with strong demand for memory chips and displays overcoming the COVID-19 pandemic’s effect on smartphone sales.
The world’s biggest smartphone and memorychip maker said in an earnings estimate that it expected operating profit to be 8.1 trillion won (US$6.8 billion) for April to June, up from 6.6 trillion won in the same period last year.
The prediction was far ahead of analyst forecasts of a single-digit decline.
Photo: AP
Lockdowns imposed around the world in the face of the pandemic — especially in Europe and the US — have boosted Samsung’s chip business with data centers moving to stockpile DRAM chips to meet surging demand for online activities.
“The earnings surprise seems to have stemmed from Samsung’s memorychip sector,” said Park Jin-suk of market observer Counterpoint, pointing to “increased demand for memory chips for PCs and a continuing rise in DRAM chip prices.”
Similarly, TV sales, which have been on a long-term decline, were “moving upward as people spend more time at home,” said James Kang, an analyst at market observer Euromonitor International Korea.
Samsung attributed the estimated operating profits rise to a one-off profit generated from its display division, without offering details.
The company predicted overall sales in the second quarter would be down by 7.3 percent from a year earlier.
The firm is the world’s largest smartphone maker, accounting for 20 percent of global market share in the first quarter, ahead of China’s Huawei Technologies Co (華為) with 17 percent and Apple Inc with 14 percent, Counterpoint said.
Global smartphone sales slumped more than 20 percent year-on-year in the first quarter, their worst performance ever, as the pandemic hit consumer spending and sparked widespread economic uncertainty, market tracker Gartner Inc said.
Looking forward, analysts expect the firm’s smartphone and television businesses to improve, with mobile sales growing as restrictions are lifted in some parts of the world.
Smartphone “sales in the US and Europe showed signs of improvement from late in second quarter,” Park said.
“Going into the third quarter, we expect the sales figure to rise,” he added, predicting smartphone sales in the “low 70 millions” for the quarter.
Last month’s military brawl between India and China could also play in Samsung’s favor, Kang said, if Indian consumers choose Samsung devices over Chinese brands amid heightened nationalistic sentiment against Beijing.
Despite the positive forecast, Samsung Electronics shares closed down 2.9 percent yesterday, leaving them nearly 15 percent off January’s record high.
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