Samsung Rides Pandemic-Led Demand for Chips to Report Surge in Profits

Samsung Electronics’ web income surged greater than 70 p.c in the second quarter thanks to increased reminiscence chip costs fuelled by pandemic-led demand, the South Korean tech big reported Thursday.

Coronavirus-driven working from dwelling boosted demand for units and home equipment powered by Samsung’s reminiscence chips. The firm stated that “memory shipments exceeded previous guidance and price increases were higher than expected”.

The world’s greatest smartphone maker noticed web income rise 73.4 p.c year-on-year to SKW 9.6 trillion (roughly Rs. 62,280 crores) for the April to June interval, the corporate stated in a regulatory submitting.

Operating revenue elevated 54.3 p.c to SKW 12.6 trillion (roughly Rs. 81,730 crores) from SKW 8.1 trillion (roughly Rs. 52,550 crores) a yr earlier, greater than half of which got here from the agency’s semiconductor enterprise.

The robust outcomes come regardless of an on-quarter decline in Samsung’s earnings from its smartphone enterprise due to provide chain issues that disrupted world manufacturing.

Samsung Electronics is the flagship subsidiary of the enormous Samsung group, by far the most important of the family-controlled empires that dominate enterprise in South Korea, the world’s twelfth largest financial system. 

The conglomerate’s general turnover is equal to one-fifth of gross home product. 

Analysts say the chip unit’s proportion of the agency’s revenue is probably going to develop in the months forward.

“Samsung will benefit from memory chip prices that are likely to go higher in the third and fourth quarter,” Park Sung-soon, an analyst at Cape Investment & Securities, instructed AFP.

The agency anticipates beneficial market situations for the remainder of the yr, with continued demand for reminiscence chips in the server and cell markets. 

But it warned that pandemic-fuelled uncertainty would persist in the second half, noting “continued disruptions in component supply”.

Samsung is anticipated to showcase the newest foldable smartphone fashions of its Galaxy Z and clamshell Galaxy Z Flip subsequent month.  

Makers of foldables are more and more aggressive, and embody rivals akin to Huawei and Xiaomi. 

Samsung goals to solidify its place in the smartphone market “with the rollout of its premium mobile lineups as well as cheaper models in the third quarter”, stated James Kang, senior analyst at Euromonitor International. 

But Kang stated the corporate might face headwinds subsequent yr, as shopper demand is probably going to be weaker than in 2021. 

Samsung additionally faces authorized challenges. 

Its chief Lee Jae-yong is at the moment on trial, charged with manipulating a takeover to clean his succession on the prime of the Samsung group.

Lee was individually jailed in January over a sprawling corruption scandal that introduced down former president Park Geun-hye.

South Korea’s company leaders and students say a management vacuum might hamper the agency’s decision-making about large-scale investments, beforehand key to its world rise.

Lee is eligible for parole subsequent month after finishing greater than half of his two-and-a-half yr jail time period.