Samsung on Wednesday reported a probable 53 p.c bounce in second-quarter working revenue, beating market estimates on the again of sturdy chip costs and demand regardless of decrease smartphone gross sales.
The preliminary result’s up 33 p.c from the primary quarter and underscores the hovering demand for chips that has depleted stockpiles amid a pandemic-led client urge for food for electronics and recovering funding in knowledge centres.
The world’s largest reminiscence chip and smartphone maker stated revenue for the quarter ended June 30 was possible SKW 12.5 trillion (roughly Rs. 82,025 crores), effectively above a Refinitiv SmartEstimate of SKW 11.3 trillion (roughly Rs. 74,145 crores). If confirmed later this month, it will be the tech big’s largest second-quarter revenue since 2018.
“Third-quarter revenue is predicted to be even greater on sturdy cell DRAM reminiscence chip costs, and peak seasons for cell and show companies,” stated Park Sung-soon, analyst at Cape Funding & Securities.
For the second quarter, Samsung’s chip division revenue possible jumped by a fifth or extra from a 12 months earlier, analysts stated, helped by sturdy memory-chip costs and demand for client electronics and from knowledge centre clients.
Samsung’s reminiscence chip shipments, particularly for DRAM chips extensively utilized in servers, cell phones, and different computing gadgets, have been bigger than anticipated, contributing to chip income that dwarfed a steep quarter-over-quarter fall in smartphone shipments.
Improved yield in cutting-edge 1z nanometre DRAM chip manufacturing utilizing ASML’s excessive ultraviolet lithography (EUV) machines additionally possible lessened prices from the primary quarter, analysts stated.
Earnings at Samsung’s chip contract manufacturing and logic chip design companies have been prone to have improved too as operations at a storm-hit manufacturing unit in Texas returned to regular, analysts stated.
“One of the vital-anticipated components within the earnings name later this month is how a lot the chip contract manufacturing enterprise has progressed in competitiveness, and the present standing of foundry clients and orders,” stated Lee Gained-sik, analyst at Korea Funding & Securities.
“One other is what adjustments Samsung expects in reminiscence chip profitability, as rivals like Micron are stated to be narrowing the expertise hole (with Samsung),” Lee added.
Final month, U.S. reminiscence chip rival Micron reported a quarterly revenue that beat Wall Avenue estimates, and forecast current-quarter income above expectations.
Smartphone shipments
Samsung’s smartphone shipments fell to about 59 million in April-June from about 76 million within the first quarter, in line with Shinyoung Funding & Securities, as gross sales of its flagship mannequin launched within the first quarter slowed.
New COVID-19 outbreaks in areas akin to India and Vietnam, in addition to constrained provide of cell processor chips, additionally harm smartphone shipments within the quarter, analysts stated. These circumstances are possible to enhance within the second half, they added.
A one-off acquire for Samsung’s show unit, which analysts stated was a compensation from Apple for beforehand ordering fewer parts than agreed upon, was additionally included within the quarterly revenue.
Income rose an estimated 19 p.c from the identical interval a 12 months earlier to SKW 63 trillion (roughly Rs. 4,13,630 crores), Samsung stated.
Samsung shares fell 1 p.c in morning commerce, whereas the broader market fell 0.7 p.c. Samsung shares have traded practically flat to date this 12 months versus a 15 p.c rise within the benchmark KOSPI.
Samsung launched solely restricted knowledge in Wednesday’s regulatory submitting forward of the discharge of detailed earnings figures later this month.
© Thomson Reuters 2021