Samsung Electronics might witness a surge in profit of as much as 38% for the April-June quarter. There are at least three contributors to the surge from strong chip prices, rebound electronics demand and recovering investment in data centres.
Analysts predict the performance of the South Korean tech giant to remain its strong growth despite slow smartphones shipping. Surging chips demand likely covered for the loss in the aforementioned sector.
The world’s biggest memory chip and smartphone maker might be able to prove its dominance in Q2 as well. Refinitiv SmartEstimate noted that the operating profit for Samsung could jump to 22.3 trillion won ($10 billion). The figure came from 20 analysts’ predictions, weighted towards those with higher consistency and accuracy.
If the number is met, this Q2 will note the highest operating income for the second quarter since 2018 with a 20% jump. Additionally, analysts predicted revenue to rise by 15.4%.
The preliminary second-quarter results for Samsung will be announced on Wednesday, Reuters notes.
Samsung: gains and losses
Analysts estimated a great gain in Samsung’s chip division. In the past few months, the memory chip price has surged over the market estimates.
For example, the prices for DRAM chips have gone 27% from the March quarter. This type of chip is often found in servers, mobile phones and other computing devices.
In comparison, NAND flash chips, often found to serve the data storage market, grew 8.6%, Trendforce notes.
Due to the rising prices for chips, Samsung’s chip-contract manufacturing and logic chip design business also raked in more benefits. This is further helped by the recontinuation of operations in its Texas factory after being hit by a storm.
The estimated operating profit for Samsung’s chip division in April-June grew around 22% to roughly 6.6 trillion from the year prior.
Samsung’s smartphone shipment, however, took a blow. According to Shinyoung Investment & Securities, shipments for April-June fell to about 59 million. Quite the steep decline from 76 million in the first quarter. Slow sales for its latest flagship model launched back in mid-January likely contributed to the decline.
Analysts also mentioned several other reasons that might have affected shipments. Reduced demand from India and unexpected pandemic attacks during the quarter are among the list. Additionally, a tight supply for some mobile processor chips may also be one of the contributors.
Accordingly, analysts’ prediction for the mobile business operating profit falls at about 2.9 trillion won.
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