South Korea’s Samsung Electronics on Thursday reported its best April-June profit since 2018, boosted by strong memory chip sales to server customers despite falling demand for inflation-hit smartphone makers.
Shares in the world’s largest maker of memory chips and smartphones rose 2.5 percent after the announcement of preliminary results for the second quarter, while the broader market rose 1.5 percent.
Samsung’s operating profit came in at 14 trillion won ($10.7 billion), up 11 percent from 12.57 trillion won a year earlier, and below Refinitiv’s SmartEstate estimate of 14.45 trillion won. Revenue rose 21 percent to 77 trillion won, according to estimates.
The company’s strong quarter comes at a time when other chipmakers warned of a glut of customers hoarding them during the pandemic to meet rising demand from those working from home.
Rising inflation, concerns about a slowdown in key markets, the war in Ukraine and a lockdown in China to combat “Covid-19” were factors that led to the slowdown in smartphone sales, analysts said.
The company’s profits are protected as Alphabet’s subsidiary Amazon, Microsoft, and major US tech companies such as Google and Meta continue to buy chips to meet cloud demand.
A stronger dollar, which hit a 20-year high, helped Samsung’s chip revenue turn more profitable in the second quarter.
Counterpoint Research said Samsung’s second-quarter smartphone shipments were estimated at 62 million to 64 million, five to eight percent lower than the March estimate, as inflation hurt demand for smartphones. Samsung shipped 74 million smartphones in the first quarter. (Reuters)