Samsung Electronics Sees Strong Chip Demand, Mobile Recovery As Q2 Profit Jumps

Korean tech giant Samsung forecasted strong demand for memory chips in the second quarter and a rebound in the mobile market to 2019 levels, reflecting a recovery of the global economy from the impacts of the Coronavirus pandemic.

Samsung’s operating profit in the April-June quarter stood at 12.6 trillion won, the strongest result that the company has reported since the third quarter of 2018. Impressively, the company’s operating profit for the second quarter shot up 54%, thanks to high chip prices and better than expected demand.

The world’s top maker of memory chips said in a statement that it expected market conditions to be favorable for the second half. It highlighted that “memory demand will likely be buoyed by new smartphone model launches, with wider 5G availability driving growth.”

While Samsung is keeping its expectations high, it cautioned that the global non-memory chip shortage still poses a risk to forecasts, with uncertainties related to Coronavirus pandemic and geopolitical tensions also likely to come into play.

Smartphone makers have expressed their concerns over the global shortage of semiconductors as they prepare to launch new products in the second half of the year. American Tech giant Apple said that it expected the impact of the chip shortage to worsen in the fourth quarter and affect its production of iPhones.

Still, Samsung pointed to strong fundamentals for the memory chip market on increasing 5G adoption and sustained demand for servers and PCs. It noted that its chip inventory was “very low” after it shipped more chips than previously expected in the second quarter.

According to analysts, Samsung will perform well in the third quarter, and even better than the second quarter, due to continued spike in DRAM prices and high display sales on new smartphone launches.

Meanwhile, mobile profits dipped from the previous quarter due to a constrained supply of mobile processor chips and pandemic-related production disruptions.

Samsung plans to launch its next flagship foldable smartphone on the 11th of August, which is expected to be compatible with a stylus. The company is also expected to reduce the price of its foldable phones, making them more accessible to consumers.

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