Samsung Electronics Co yesterday forecast an expectations-beating jump of more than 53 percent in second-quarter operating profit, thanks to strong chip prices and operations resuming at a key US factory.
The world’s biggest smartphone maker said in an earnings estimate that it expected operating profit of about 12.5 trillion won (US$11 billion) for the second quarter, up from 8.15 trillion won last year.
The figures were ahead of an 11 trillion won average of estimates, Bloomberg News reported.
COVID-19 pandemic-driven working from home has boosted demand for devices powered by Samsung’s chips, as well as home appliances, such as TVs and washing machines.
It estimated sales for the period at 63 trillion won, up about 19 percent year-on-year.
Analysts said the company has had a particular boost from memorychip price hikes.
Taipei-based market researcher TrendForce Corp (集邦科技) last month expected prices of memory chips, especially DRAM — widely used in servers and mobile phones — to rise through the third quarter of this year as a “severe undersupply situation persists.”
Samsung’s earnings “will remain solid, mostly due to increased demand for memory chips, rising DRAM prices,” said Tom Kang, a research director at market researcher Counterpoint.
Power outages across Texas — caused by a severe winter storm — shut down semiconductor factories clustered around Austin in February, including Samsung’s.
The firm lost more than 300 billion won due to the suspension, Yonhap news agency reported.
Samsung said the production line in Texas was “fully normalized in the second quarter,” and IBK Investment & Securities Co analyst Kim Woon-ho said the factory’s resumption had been positive for second-quarter earnings.
However, the company’s smartphone shipments are estimated to have dropped as sales slowed for its latest flagship product, the Galaxy S21, launched in January.
“It is estimated that Samsung’s mobile production lines in Vietnam and India did not operate properly due to COVID lockdown,” Kim said in a report.
Moody’s Investors Service vice president Gloria Tsuen had a positive outlook for the firm for the second half of the year.
“The key earnings driver for Samsung will still be semiconductors,” Tsuen said.
However, the company faces legal challenges.
Samsung Electronics vice chairman Jay Y. Lee is on trial, charged with manipulating a takeover to smooth his succession at the top of Samsung Group.
Lee was separately jailed in January over a sprawling corruption scandal that brought down former South Korean president Park Geun-hye.
South Korea’s corporate leaders and academics say a leadership vacuum could hamper the firm’s decisionmaking on large-scale investments, previously key to its global rise.
Meanwhile, LG Electronics Inc, South Korea’s second-largest appliance maker, forecast a 65.5 percent jump in operating profit for the second quarter to 1.1 trillion won.
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