Samsung net profit jumps 73% in Q2 on strong chip demand

Samsung Electronics reported second-quarter revenues up 20 percent year-on-year to KRW 63.67 trillion, driven by the strong market demand for memory and other semiconductor products as well as premium consumer electronics.

This helped offset component shortages and supply chain problems affecting its smartphone business. Operating profit jumped 54 percent to KRW 12.57 trillion, and the company’s net profit rose 73 percent to KRW 9.63 trillion.

“For the second half, market conditions are expected to be favourable for the component business,” Samsung said in a statement. “Memory demand will likely be buoyed by new smartphone model launches, with wider 5G availability driving growth.”

Memory chips

The world’s largest smartphone and memory-chip maker cautioned that a global shortage of non-memory chips still poses a risk to forecasts, while uncertainties related to COVID-19 and geopolitical tensions are likely to persist.

Revenue increased 20 percent to 63.67 trillion won. The performance topped analysts’ estimates and underscored the global appetite for digital goods and services that this week also helped lift earnings at Microsoft Corp. , Apple and mobile-phone chip company Qualcomm Inc.

Strength at Samsung’s memory business propelled its second-quarter results, while the pandemic shifts have kept demand high for personal computers, data servers and mobile devices, which all require memory chips. As a result, memory-chip makers recorded growth in shipments and enjoyed greater pricing power.

Still, Samsung pointed to strong fundamentals for the memory chip market on increasing 5G adoption and sustained demand for servers and PCs. It noted its chip inventory is “very low” after it shipped more chips than previously expected in the second quarter.

Next flagship foldable

Samsung plans to unveil its next flagship foldable smartphone on Aug. 11, expected to be compatible with a stylus.

“Samsung will see solid third quarter results as DRAM prices spike further and display sales rise on new smartphone launches including from Apple. The unknown variable is smartphone sales,” said Park Sung-soon, analyst at Cape Investment & Securities.

Chip contract

Samsung’s chip contract manufacturing business, which makes these chips, posted record revenue in the second quarter, it said.

Samsung’s operating profit in the April-June quarter of 12.6 trillion won ($10.95 billion) was the company’s best result since the third quarter of 2018.

Mobile profits dipped from the previous quarter due to constrained supply of mobile processor chips and pandemic-related production disruptions.