Samsung Electronics Co expects operating profit in the second quarter to rise 11.4 percent despite ongoing global supply chain woes, the South Korean tech giant said in a statement yesterday.
The world’s largest smartphone maker forecast second-quarter operating profits of about 14 trillion won ($10.76 billion), up from 12.6 trillion won in the same quarter last year.
Sales in the period from April to last month are expected to have increased by 21 percent year-on-year to 77 trillion won, Samsung said.
Photo: AFP
The figure would represent a downgrade from its first-quarter sales of 77.8 trillion won.
Analysts said Samsung was helped by its continued strong performances in the memorychip business, making up for declines in smartphone sales over the period.
“Samsung’s smartphone shipments for the second quarter are expected to be just over 60 million units, which is worse than expected,” Cape Investment & Securities analyst Park Sung-soon said.
Samsung shipped 74.5 million smartphones in the first quarter, research firm Counterpoint said.
That number tops the global shipments market with 23 percent, trailed by Apple Inc’s 18 percent.
With memory chips now used in a wide-ranging array of devices and cloud servers — essential for remote working in the pandemic era — the sector has become less dependent on seasonally driven demand for gadgets such as smartphones and laptops.
However, concerns are growing regarding uncertainty in the global economic outlook due to Russia’s ongoing war in Ukraine and mounting fears of recession driven by inflationary pressure.
Under such circumstances, it could be “hard for consumer demand for IT gadgets to improve in the coming months,” Park said.
The world’s largest memorychip maker, Samsung Electronics has aggressively stepped up investment in its semiconductor business as the world battles chip shortages that have affected supplies of vehicles, home appliances, smartphones and gaming consoles.
The company last week became the world’s first chipmaker to mass-produce advanced 3-nanometer microchips as it seeks to match and eventually outpace Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the race to manufacture the most advanced microchips.
The news came after its May announcement of a 450 trillion won investment spanning the next five years to “bring forward the mass production of chips based on the 3-nanometer process.”
Samsung is the market leader in memory chips, but it has been scrambling to catch up with TSMC in the advanced foundry business.
The results from Samsung — among the first major tech firms to report earnings after a pivotal quarter — helped drive a rally in Asian stocks yesterday. While concerns linger about the long-term impact of a potential global recession, investors seized on Samsung’s top-line expansion as a sign that chip stocks might have been oversold.
Samsung gained 3.2 percent in Seoul, while fellow memorychip maker SK Hynix Inc rose 2 percent. TSMC jumped 5 percent and smaller rival United Microelectronics Corp (聯電) surged 7.3 percent in Taipei. TSMC is to report its monthly sales today.
The four Asian chipmakers collectively gained about US$30 billion of market value. Despite that rally, they remain down for the year, reflecting uncertainty about the longer term.
“The results were less bad than expected,” HI Investment & Securities Co analyst Song Myung-sup said. “There were huge worries and earnings estimates were getting lowered, but the results came within the boundary of expectations.”
US rival Micron Technology Inc, the third biggest DRAM maker, last week gave a grim outlook for the current quarter with lowered expectations for tech spending.
Additional reporting by Bloomberg
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