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An Estimated 38% Likely Surge In Samsung Electronics Q2 Profit Driven By Strong Chip Prices


07/06/2021


An Estimated 38% Likely Surge In Samsung Electronics Q2 Profit Driven By Strong Chip Prices
Strong chip prices and high demand because of a pandemic-led consumer appetite for electronics, in addition to recovering investment in data centres helped South Korea’s Samsung Electronics Co Ltd to likely propel a 38 per cent growth in its profits for the April-June quarter.
 
According to a Refinitiv SmartEstimate based on estimates of 20 analysts and weighted toward those who are more consistently accurate, the likely operating profit for the biggest memory chip and smartphone maker of the world likely surged to 11.3 trillion won ($10 billion) for the aforesaid quarter.
 
The very high demand for semiconductor chips that has depleted stockpiles and filled production capacity is reflected in the strong performance of the South Korean tech giant even though the smartphone shipment for the quarter was lower than that in the previous January-March quarter. 
 
The result would be up 20% from the first quarter and mark Samsung's highest operating income for the second quarter since 2018. Revenue likely rose 15.4%.
 
Samsung will be announcing its preliminary second-quarter results on Wednesday.
 
Analysts said that the hike in memory chip prices that were higher than estimates of the market likely benefitted the chip division performance of the company while there was growth in shipments as well.
 
According to research provider Trendforce, there was a 27 per cent quarter on quarter surge in the prices of DRAM chips for the April–June quarter. These chips are widely used in servers, mobile phones and other computing devices. Data also showed that there was a 8.6 per cent quarter on quarter rise in the prices of NAND flash chips that are used in the data storage market.
 
According to analysts, resumption of production to normal at its storm-hit Texas factory also partly helped the chip-contract manufacturing and logic chip design business of Samsung to report better profits. According to their estimates there likely was a 22 per cent year on year growth in the operating profit of the company’s chip division in the April-June quarter at about 6.6 trillion won.
 
On the other hand however, according to Shinyoung Investment & Securities, the total shipment of smartphones of the company for the quarter dropped to about 59 million in April-June quarter compared to shipment of 67 million units in the previous quarter with sales of company’s latest flagship model that was launched in mid-January slowed down more than expected.
 
Analysts said that the drop in shipments could have been because of a reduction in demand for Samsung’s phones from India which was amid a devastating second wave of the Clovid-19 pandemic during the quarter in addition to tightening of supply for some mobile processor chips. The estimated operating profit of the business was at about 2.9 trillion won for the mobile business of Samsung, according to analysts. 
 
(Source:www.nasdaq.com)