Samsung expects smartphone demand to drive second half earnings

Samsung

Samsung Electronics anticipates a recovery in demand for smartphones and customer electronic equipment to underpin profits in the second half of the year, after a coronavirus-propelled shift to online functioning boosted earnings.

Samsung, the world’s top maker of memory chips, analysed its optimistic forecast when announcing second quarter results on Thursday with a warning that the disputes posed risks that were ongoing such as earnings.

Samsung posted a jump in operating profit in the April-June quarter on the back of DRAM memory chip sales together with reductions in expenses, to server providers.

Prices for the chips, which create temporary workspaces to permit devices spiked in the second quarter. Samsung’s Korean peer SK Hynix and US company Micron Technology Inc also benefited from the trend.

Operating profit at Samsung’s chip company surged 60% to 5.43 billion gained in the next quarter, accounting for two thirds of its total 8.1 trillion earned gain.

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Samsung said it anticipated server demand for processors to stay solid for the remainder of a increase plus the year in smartphone need, given product launches and demand for 5G-capable phones.

Still, Samsung and Asian tech firms in the worldwide supply chain are rocked by trade tensions between the US and China that has set cross-border trade in technology, devices and parts in the mercy of politics.

“Given many uncertainties including COVID-19, trade tension and that customers may change their inventory and investment strategies, it’s still difficult to say when (DRAM) price will hit an inflection point,” senior vice president of memory business Han Jin-man said.

The company would keep a close eye on chip inventory levels at data centre firms who stockpiled to meet demand, he said.

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“Demand for the second half… will be relatively weak… but it’s not going to be a hard landing as the market had feared,” said Choi Young-san, analyst at E-Best Securities.

SMARTPHONE LAUNCHES

Quarterly operating profit in Samsung’s mobile branch climbed 25 percent to 1.95 billion won. Overall earnings dropped 6% to 53 billion won.

During this quarter, China’s Huawei overtook Samsung as the world’s biggest seller of mobiles, shipping 55.8 million apparatus into Samsung’s 53.7 million, according to research firm Canalys.

Huawei Technologies rise was spurred by sales in China, where new COVID-19 cases are low, but Samsung is likely to gain market share as demand in different countries regain.

Samsung plans to unveil brand new flagship smart phones, including the Galaxy Note and a cellphone at the second half, in addition to expand revenue of models.

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Samsung also said its display company, making displays for mobile phones, televisions and monitors and counts Apple Inc as a client, is expected to increase late this season as set makers launch new products to meet demand from lockdowns easing and individuals shopping for year-long vacations.

Samsung’s stocks rose 0.2% on Thursday, matching a 0.2% gain in the broader market.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Joyce Lee and Heekyong Yang. Additional reporting by Hyunjoo Jin. Editing by Jane Wardell.

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