Chips posted Samsung’s highest revenue in Q2 since 2018

Individuals stroll previous the emblem of Samsung Electronics in Seoul on July 7, 2022. South Korea’s Samsung Electronics Co Ltd on Thursday turned in its finest April-June revenue since 2018, pushed by sturdy gross sales of reminiscence chips to server clients, regardless of inflationary demand. -Hit smartphone maker cool.

Jang Yeon-jae | AFP | Getty Photographs

South Korea’s Samsung Electronics on Thursday posted its finest April-June achieve since 2018, primarily based on sturdy gross sales of reminiscence chips to server clients, regardless of calming demand from inflation-hit smartphone makers.

Shares of the world’s largest memory-chip and smartphone maker rose 2.5% after saying second-quarter preliminary outcomes, whereas the broader market gained 1.5%.

Samsung posted an working revenue of 14 trillion gained ($10.7 billion), up 11% from 12.57 trillion gained a yr in the past, simply shy of SmartEstimate’s 14.45 trillion gained from Refinitiv. Income grew 21% to ₹77 trillion, in accordance with estimates.

The sturdy quarter for Samsung comes at a time when different chip makers have warned of a rising chip glut on clients stocking up in the course of the pandemic to satisfy excessive demand for individuals working from dwelling.

Chipmakers, together with Micron and Superior Micro Units, have additionally indicated a current slowdown in demand as red-hot inflation drives spending.

“Reminiscence chipmakers are anticipated to construct up stock and improve shipments when costs rise once more and demand improves subsequent yr,” mentioned Park Sung-soon, an analyst at Cape Funding & Securities.

Costs for particular DRAM chips utilized in units and servers fell about 12% final month in comparison with a yr in the past, in accordance with information supplier Trendforce. The costs of NAND flash chips used for information storage are additionally projected to fall by 5% within the July-September interval as in comparison with the earlier quarter.

Smartphone demand weak

Analysts mentioned rising inflation, worries a few slowdown in key markets, the warfare in Ukraine and China’s COVID-19 lockdown have slowed smartphone gross sales, leaving server chip demand the one brilliant spot.

He mentioned Samsung’s earnings are shielded as giant US tech corporations akin to Amazon, Microsoft, Alphabet’s Google and Meta use numerous information middle providers whereas shopping for chips to satisfy cloud demand. , They mentioned.

Making a case for sturdy server demand, Taiwanese contract electronics provider and Apple iPhone maker Foxconn on Monday raised its full-year outlook and mentioned it was optimistic concerning the third quarter.

A stronger greenback, which hit a 20-year excessive, might also have helped Samsung’s chip earnings within the second quarter.

Samsung’s chip gross sales are primarily performed in {dollars}, whereas it reviews its positive aspects in Korean gained, so a agency dollar interprets to larger chip earnings.

Expect recovery in Samsung's smartphone business: Analyst

Smartphone shipments estimated by Samsung’s cell enterprise within the second quarter had been round 62-64 million, down about 5%-8% from March estimates, Counterpoint Analysis mentioned, as inflation hit smartphone demand.

Samsung shipped 74 million smartphones within the first quarter.

“This pattern is analogous for main world smartphone makers, though there may be a point of variation… Specifically, the influence on low- and mid-end smartphone demand appears to be extra extreme,” mentioned Jayne Park, senior analyst at Counterpoint. .

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