Samsung Electronics Co yesterday reported its net profit grew 7.3 percent year-on-year in the second quarter, with strong demand for memory chips overcoming the impact of the COVID-19 pandemic on smartphone sales.
The world’s biggest smartphone and memorychip maker said that net profit in the April-to-June period was 5.56 trillion won (US$4.66 billion). Operating profit rose 23.48 percent to 8.15 trillion won, even as sales dropped 5.6 percent to 52.97 trillion won.
The figures come as the pandemic wreaks havoc across the world economy. However, lockdowns imposed around the world in the face of the pandemic — especially in Europe and the US — have boosted the firm’s chip business, with data centers moving to stockpile DRAM chips to meet surging demand for online activities.
“Even as the spread of COVID-19 caused closures and slowdowns at stores and production sites around the world, the company responded to challenges through its extensive global supply chain,” Samsung said in a statement.
It also minimized the impact of the pandemic by “strengthening online sales channels and optimizing costs,” it added.
Analysts said they expect the firm’s memory-chip and television businesses to improve.
Diplomatic and military tensions between India and China could also play in Samsung’s favor, analysts said, if Indian consumers choose to shun Chinese brands and opt for Samsung devices instead.
“The growth is likely to be driven by memory chips and displays, as both of these products are in high demand due to heavy content consumption during the lockdown,” said Prachir Singh, a senior analyst at market observer Counterpoint.
“India is showing a pent-up demand as the country recovers in the post-lockdown period,” Singh said. “There is certainly an anti-China sentiment in the minds of Indian consumers. Samsung is surely benefiting from this.”
China’s Huawei Technologies Co (華為) overtook Samsung to become the No. 1 smartphone seller worldwide in the second quarter on the back of strong domestic demand, industry tracker Canalys said yesterday.
Canalys said the embattled firm, which is facing US sanctions and falling overseas sales, shipped 55.8 million devices — overtaking Samsung for the first time, which shipped 53.7 million units.
The findings marked the first quarter in nine years that a company other than Samsung or Apple has led the market, Canalys said.
Separately, Qualcomm Inc on Wednesday gave a strong sales forecast for the current quarter, signaling that 5G mobile phone services are taking off.
The chipmaker also announced a new licensing deal with Huawei.
Revenue excluding certain items would be US$5.5 billion to US$6.3 billion in the period ending in September, the San Diego-based company said in a statement.
Including back payments from Huawei, sales would be US$7.3 billion to US$8.1 billion, the firm said. Profit, excluding some items, would be US$0.0105 to US$0.0125 a share.
In the fiscal third quarter, Qualcomm said adjusted revenue was little changed from a year earlier at US$4.89 billion. Net income was US$845 million, or US$0.74 a share. Excluding certain items, profit was US$0.86, compared with analysts’ average estimate of US$0.70.
Additional reporting by Bloomberg
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