Samsung Electronics posted its highest second-quarter profit for the period since 2018, supported by strong sales of server memory chips, despite demand from smartphone makers having cooled by inflation.
Shares in the world’s biggest memory chip and smartphone maker closed up 3.2% after the announcement, compared with a 1.8% rise in the broader market.
Samsung had an operating profit of 14 trillion won ($10.7 billion), up 11% from a year earlier.
The performance was slightly below the average expectation of 14.45 trillion won compiled by Refinitiv with analysts.
Second-quarter revenue rose 21% to 77 trillion won, in line with market estimates.
Other microprocessor makers recently warned of an impending oversupply of chips in customers who stocked up on electronics during the pandemic to meet demand coming from the impacts of social isolation measures.
“Memory chip makers are expected to build inventories this year, putting pressure on supply, and increase sales when prices recover and demand recovers next year,” said Park Sung-soon, analyst at Cape Investment & Securities.
Prices for specific DRAM chips, used in devices and servers, are down about 12% last month from a year ago, according to data provider TrendForce.
Prices for NAND Flash chips, used for data storage, are also expected to drop as much as 5% in the July-September period from the previous quarter.
Weak smartphone demand
Rising inflation, concerns about a slowdown in key markets, the war in Ukraine and lockdowns in China have resulted in a slowdown in smartphone sales, leaving demand for server chips the only bright spot, analysts said.
Samsung’s results were protected because major US tech companies such as Amazon, Microsoft, Google and Meta, which use many data center services, continued to buy chips to meet demand for cloud computing services, they added.
A strong dollar, which hit a 20-year high, also helped boost the company’s performance in the second quarter.
Estimated smartphone sales by Samsung’s mobile phone division in the second quarter were about 62 million to 64 million units, about 5% to 8% below the March estimate, Counterpoint Research said, citing inflation’s impact on the demand.
In the first quarter, Samsung sold 74 million smartphones.
Source: CNN Brasil
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