Samsung Electronics Co’s net profit surged more than 70 percent in the second quarter thanks to higher memorychip prices fueled by demand spurred by the COVID-19 pandemic, the South Korean tech giant reported yesterday.
Pandemic-driven working from home boosted demand for devices and appliances powered by Samsung’s memory chips.
The company said that “memory shipments exceeded previous guidance and price increases were higher than expected.”
The world’s biggest smartphone maker saw net profit rise 73.4 percent year-on-year to 9.6 trillion won (US$8.38 billion) for April to June, the company said in a regulatory filing.
Operating profit increased 54.3 percent to 12.6 trillion won from 8.1 trillion won a year earlier, more than half of which came from the firm’s semiconductor business.
The strong results come despite a quarter-on-quarter decline in Samsung’s earnings from its smartphone business because of supply chain problems that disrupted global production.
“Samsung will benefit from memorychip prices that are likely to go higher in the third and fourth quarter,” Cape Investment & Securities analyst Park Sung-soon said.
The firm anticipates favorable market conditions for the rest of the year, with continued demand for memory chips in the server and mobile markets, but it warned that pandemic-fueled uncertainty would persist in the second half, citing “continued disruptions in component supply.”
Samsung is expected to showcase the latest foldable smartphone models of its Galaxy Z and clamshell Galaxy Z Flip next month. The upcoming gadgets would be equipped with “new multitasking capabilities and enhanced durability,” said T.M. Roh, head of Samsung’s mobile communications business.
Samsung aims to solidify its position in the smartphone market “with the rollout of its premium mobile lineups as well as cheaper models in the third quarter,” said James Kang, senior analyst at Euromonitor International.
The company could face headwinds next year, as consumer demand is likely to be weaker than this year, Kang said.
Samsung also faces legal challenges. Its leader, 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. He is eligible for parole next month after completing more than half of his two-and-a-half year jail term.
Meanwhile, LG Electronics Co, South Korea’s second-largest appliance firm after Samsung, posted a 65.5 percent jump in operating profit for the second quarter, to 1.1 trillion won.
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