(Bloomberg) – Samsung Electronics Co. it exceeded profit estimates and provided a cautiously optimistic outlook, which predicts that new smartphones and game consoles will increase demand for memory chips in the second half of the year.
Net income rose to 5.5 trillion won ($ 4.6 billion) in the three months ended June. The company reported filings on Thursday, compared to 4.9 trillion winning averages estimates made by Bloomberg. The South Korean company reported preliminary figures earlier this month, which showed an increase in operating profit of 23%.
Samsung, the world’s largest smartphone maker and supplier of components such as memory chips, is navigating with other technology industries as a result of the coronavirus pandemic. The company warned of a downturn in consumer business in the second quarter. However, sales of smartphones, TVs and other devices began to recover, and the company said demand is likely to be supported by the introduction of new game consoles and phone models expected from Apple Inc. and Samsung themselves.
“Covid-19 continues to obscure the outlook for demand, but structurally speaking, demand exists,” said Bloomberg news analyst Anthea Lai. “We are getting more 5G smartphones from Samsung and more consumer demand is expected in the second half of the year.”
Samsung shares rose as much as 1.9% in trading in Seoul, bringing earnings to about 10% this week. The company stated that it would not provide annual financial guidance due to uncertainty caused by coronaviruses.
Although best known for its phones abroad, Samsung makes the most of the memory chips used in everything from phones and consoles to servers that help provide online services such as video and music. Samsung has said it expects the overall DRAM market to rise.
“Looking at the second half, we expect overall demand for mobile phones to recover and graphics demand to increase,” said Jinman Han, senior vice president of semiconductor business. “As far as servers are concerned, the demand for memory caused by household activities seems to persist as Covid-19 and other uncertainties persist.”
The company’s own mobile devices, soon to be updated by the flagship Galaxy Note and Galaxy Z Fold, are expected to improve revenue on a quarterly basis, but the company stressed that uncertainties related to Covid-19 will persist.
“We also think that customers were able to increase their inventory during the first half of the year, so another variable for demand in the second half is the direction of our customers’ inventory management,” Han said.
Samsung shares rose earlier this week with reports of delayed production of Intel Corp. chips. and it may be necessary for some future chip processes to outsource Taiwanese semiconductor manufacturers. Samsung is one of the few companies equipped to handle advanced semiconductor manufacturing, and the potential to gain more business activity from Intel has fueled the mood in the market.
What Bloomberg Intelligence says
Samsung’s foundry business could benefit from Intel’s decline in chip production, as TSMC’s industry leader may have a strict production schedule to meet US demand. Samsung is already a supplier of Intel processors based on the 14 nanometer process.
– Anthea Lai, analyst
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In addition to the impact of Covid-19, geopolitical issues are also likely to relocate the global supply chain in a way that affects Samsung’s business. Prohibitions on Huawei Technologies Co. In the US and the UK, Samsung is opening up more opportunities to sell 5G network equipment and smartphones.
The mobile division of the world’s largest smartphone manufacturer recorded an increase in operating income of 25% to 1.95 trillion won. The Korean giant expects smartphone sales to increase in the third quarter with the introduction of new Android devices, including a folding phone set, but warned of intensifying competition in the market among smartphone manufacturers seeking to offset weak performance during the pandemic.
More information: Samsung irritates new mobile devices for a generation stay at home
“Galaxy Fold 2 may become a game changer in the smartphone ecosystem,” said Greg Roh, senior vice president, HMC Securities. “Most of the shortcomings identified in the previous model were overcome with ultra-thin glass and a larger display.”
Samsung’s display division, which supplies organic light-diode screens to Apple’s iPhone, has an operating profit of 300 billion won. Although the display business suffered as a result of the virus market’s decline in the smartphone market, the loss was offset by compensation from Apple. Analysts say the amount of the payment was about 1.1 trillion won.
The consumer electronics unit, which includes televisions and appliances, reported a profit of $ 730 billion. Samsung expects TV and digital devices to recover in the second half of this year due to reduced demand for virus blockages and holiday spending.
(Update with details of the proceeds from the third paragraph)
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