Samsung Electronics' Q2 Operating Profit Up 23% on High Chip Demand

Samsung Beats Earnings Estimates on Recovery of Chips Gadget Sales

Samsung said that it expects to see a continuation in the gradual recovery in demand for mobile and consumer electronics during the second half of 2020.

However, it warned that its business still faces risks from the coronavirus pandemic and increased competition.

Second-quarter operating profit grew 26% from the previous quarter, and 23% year-over-year to 8.15 trillion won (about $6.84 billion), due largely to more sales of DRAM chips.

The figures were in line with the earnings guidance announced earlier this month that beat the market consensus.

Samsung's sales, on the other hand, dropped five-point-six percent on-year to 52-point-97 trillion won.

"The growth is likely to drive by memory chips and displays as both of these products are in high demand due to heavy content consumption during the lockdown", Prachir Singh, a senior analyst at market observer Counterpoint, told AFP. Memory chips account for the bulk of Samsung's revenue, and the company said most of the demand in the last quarter came from data centers that are bulking up to cater to remote workers and online learning.


Its operating profit from the chip business almost doubled to 5.43 trillion won from 3.4 trillion won a year ago. Earnings from the memory business was driven by increased demand from datacenters and PCs. For the foundry business, investment mostly went into advanced 5nm and 8nm processes to boost production capacity, he said. The profits also include a one-time gain at its display panel business, the company said.

LG Electronics, South Korea's second-largest appliance firm after Samsung, posted a second-quarter net profit slump of 38.1 per cent to 65.6 billion won Thursday, saying it had been "affected significantly" by the pandemic. It logged 6.72 trillion won in sales and an operating profit of 300 billion won.

Samsung Electronics' earnings for the second quarter of 2020 amounted to around six.eight billion US dollars.

Despite weaker smartphone sales during the quarter, Samsung's Mobile Communications Business reported solid profitability on marketing cost reductions and other cost optimizations. Its total capital expenditure in the first half was tallied at 17.1 trillion won. "Given the multiple uncertainties, including the COVID-19 situation, rising trade tensions and a potential change in the inventory levels of suppliers and customers, it's hard to tell when the price inflection point will be", Han Jin-man, senior vice president of Samsung's memory business unit, said in the call.

Samsung's home appliance division, comprised of visual display and digital appliance businesses, chalked up sales of 10.17 trillion won, down 8.1 per cent from a year earlier, but operating profit climbed 2.8 percent on-year to 730 billion won.

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