Samsung Electronics forecasts profits jump despite virus

8 July, 2020 12:00 AM printer

SEOUL: Samsung Electronics forecast a 23-percent rise in second-quarter operating profit Tuesday, with strong demand for memory chips and displays overcoming the impact of the coronavirus pandemic on smartphone sales.

The world’s biggest smartphone and memory chip maker said in an earnings estimate that it expected operating profit to be 8.1 trillion won ($6.8 billion) for April-June, up from 6.6 trillion won in the same period last year, reports AFP.

The prediction was far ahead of analyst forecasts of a single-digit decline.

Lockdowns imposed around the world in the face of the coronavirus pandemic—especially in Europe and the United States—have boosted Samsung’s chip business with data centres moving to stockpile DRAM chips to meet surging demand for online activities. “The earnings surprise seems to have stemmed from Samsung’s memory chip sector,” said Park Jin-suk of market observer Counterpoint, pointing to “increased demand for memory chips for PCs and a continuing rise in DRAM chip prices”.

Similarly TV sales, which have been on a long-term decline, were “moving upward as people spend more time at home”, said James Kang, an analyst at market observer Euromonitor International Korea.

Samsung attributed the estimated operating profits rise to a one-off profit generated from its display division, without offering details.

The company predicted overall sales in the second quarter would be down by 7.3 percent from a year earlier.

The firm is the world’s largest smartphone maker, accounting for 20 percent of global market share in the first quarter—ahead of China’s Huawei with 17 percent and Apple on 14 percent—according to Counterpoint.