Samsung’s chip sales surge in second quarter, but hard to make up for smartphone weakness

Samsung’s chip sales were strong because of strong data center demand as home-based traffic surged, but that was not enough to offset weak smartphone sales in the second quarter,media reported. Samsung, the world’s largest supplier of DRAM and NAND memory chips, will announce preliminary figures for second-quarter revenue and operating profit on Tuesday. The company had forecast a drop in second-quarter operating profit.

According to Refinitiv SmartEstimate, profits are likely to fall 4.5 per cent from a year earlier to 6.3 trillion won ($5.25 bn). During the COVID-19 pandemic, the growth in the number of home-based and online learning supported demand for chips, which also generated about half of Samsung’s profits.

Samsung's chip sales surge in second quarter, but hard to make up for smartphone weakness

“As demand improves, the surge in DRAM prices helped Samsung continue to perform strongly in the second quarter.” Park Sung-soon, an analyst at Cape Investment and Securities, said the gains could be due to data centre hoarding of chips and therefore unlikely to continue. CW, Nomura’s head of Research in South Korea, said the outlook for the industry would not be too optimistic until the uncertainty triggered by the outbreak disappeared.

On the smartphone side, Hyundai Motor Securities estimates that Samsung’s second-quarter operating profit fell 16 percent. During the COVID-19 pandemic, sales of electronic products declined as discretionary spending declined. Samsung smartphone shipments hit a low in April and may take some time to recover, analysts said.

Samsung is expected to release detailed earnings figures later this month.