Samsung sees strong chip, handset demand as Q2 profit rise

By Arya M Nair, Official Reporter
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Samsung Foldables
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Samsung Electronics, the world’s biggest smartphone maker’s net profits surged to more than 70 percent in the second quarter due to strong demand for memory chips indicating the recovery of the global economy from the coronavirus pandemic.

COVID-induced work from home scenario raised the demand for Samsung memory chips in devices and appliances. “Memory shipments exceeded previous guidance, and price hikes were larger than projected,” the company said.

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

The company warned that a global shortage of non-memory chips, remains a risk to forecasts, while COVID-19 uncertainty and geopolitical tensions are expected to persist.

Samsung’s net profits increased 73.4 percent year on year to $8.4 billion in the April to June period, according to a regulatory filing. Operating profit grew 54.3 percent to $10.6 billion from $7.1 billion a year earlier, with the semiconductor business accounting for more than half of the growth.

A worldwide shortage of semiconductors other than memory chips is becoming a key issue for smartphone makers as they prepare to launch new products in the second half of the year.

In the second quarter, the company said it shipped 60 million smartphones, down from 81 million in the first. COVID-19 lockdowns disrupted production at Samsung’s Vietnam smartphone plant, but it was expected to return to normal in July.

Next month, Samsung has planned to unveil its latest foldable smartphone models, the Galaxy Z and the clamshell Galaxy Z Flip. Foldable smartphone makers are becoming more competitive, with rivals such as Huawei, Xiaomi, and Apple joining the race. 

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