Samsung Electronics expects second-quarter operating profit to rise 11.4 percent, the South Korean tech giant said in a statement on Thursday, despite ongoing problems in the global supply chain.
The world’s largest smartphone maker forecast operating profit of around 14 trillion won ($10.7 billion) for the second quarter of 2022, up from 12.6 trillion won in the same quarter last year.
Samsung expected sales to rise 21 percent year-on-year to 77 trillion won in the April-June period. The figure would represent a downgrade in first-quarter revenue from 77.8 trillion won.
Analysts said Samsung was helped by its continued strong performance in the memory chip business, which offset declines in smartphone sales over the period.
“Samsung’s smartphone shipments for the second quarter are expected to be just over 60 million units, which is worse than expected,” Cape Investment & Securities analyst Park Sung-soon told AFP.
According to global research firm Counterpoint, Samsung shipped 74.5 million smartphones in the first quarter, topping the global shipping market with 23 percent, followed by Apple’s 18 percent.
With memory chips now being used in a variety of devices and cloud servers — essential for remote work in the pandemic era — the sector has become less dependent on seasonal demand for devices like smartphones and laptops.
But concerns are growing over uncertainty in the global economic outlook amid Russia’s ongoing war in Ukraine and mounting fears of an inflationary-driven recession.
Under such circumstances, “consumer demand for IT gadgets will have a hard time improving in the coming months,” said analyst Park.
Samsung Electronics is the flagship subsidiary of the giant Samsung corporation, by far the largest of the family-run empires known as chaebols that dominate business in South Korea.
The total turnover of the conglomerate corresponds to about a fifth of South Korea’s gross domestic product.
-First manufacturer-
The world’s largest memory chip maker, Samsung Electronics, has aggressively increased investment in its semiconductor business as the world battles chip shortages that have hit everything from cars and home appliances to smartphones and gaming consoles.
Last week, the company became the first chipmaker in the world to mass-produce advanced 3-nanometer microchips, to match and eventually surpass Taiwan’s TSMC in the race to produce the most advanced microchips.
The new chips will be smaller, more powerful and more efficient and will be used in high-performance computing applications before being built into devices like cell phones.
The news came after May’s announcement of a 450 trillion won investment over the next five years to “advance the mass production of chips based on the 3-nanometer process.”
The vast majority of the world’s most advanced microchips are made by just two companies – Samsung and TSMC – both of which are running at full capacity to alleviate a global shortage.
Samsung is the market leader in memory chips but has struggled to catch up with TSMC in the advanced foundry business.
The supply of memory chips has gained global geopolitical importance, with leading governments scrambling to secure the supply of advanced chips.
That was demonstrated in May when US President Joe Biden kicked off a tour of South Korea with a visit to Samsung’s sprawling chip factory in Pyeongtaek.
Russia’s invasion of Ukraine has “put further spotlight on the need to secure our critical supply chains,” Biden said at the work, underscoring the importance of strengthening technology partnerships between “value-adding” countries.
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