Samsung Electronics was cautiously optimistic in its earnings report today. The company continues to deal with the aftermath of the COVID 19 pandemic, but its memory business has been bolstered by the demand for DRAM chips as data centers that are adapted to an increase in teleworking and education.
Second quarter operating income increased 26% quarter-on-quarter and 23% year-over-year to 8.15 trillion won (approximately $ 6.84 billion), mainly due to higher sales of DRAM chips. Revenue decreased 4% qoq and 6% yoy to 53 trillion won, while net profit increased 7% to 5.6 trillion won. According to Samsung, sales were impacted by lower sales of smartphones and other devices. However, part of this was offset by lower marketing expenses and other cost-cutting measures.
Samsung Electronics will present new models of its flagship smartphones at its online event “Galaxy Unpacked”
The company also admitted that it is facing intense competition from other smartphone manufacturers. In fact, on the same day that Samsung announced its second-quarter results, research firm Canalys released a report that said Huawei shipped more smartphones worldwide than any other provider in the second quarter, despite restrictions on the American one Government acted, which displaced Samsung from the US state for the first time.
On the brighter side, many analysts believe that Samsung and TSMC will benefit from Intel’s recent announcement to outsource more semiconductor manufacturing.
Remote services drove demand for DRAM chips
The company’s semiconductor division was supported by demand for data center DRAM chips that need to strengthen their online infrastructure to support remote workers and online training. PC demand also remained solid due to low laptop sales.
However, sales of chips for mobile devices remained weak as consumers spent less money due to the pandemic. When they made purchases, they tended to buy low to mid-range mobile products that use less powerful chips.
A “one-time profit” increased display sales
Samsung Electronic’s earnings from display panels improved compared to the previous quarter thanks to a “one-time profit” that increased profits from mobile displays. Samsung didn’t disclose details of where the profit came from, but Bloomberg reports that it was a compensation payment of approximately 1.1 trillion won ($ 924 million) from Apple after the iPhone maker ordered fewer displays than expected would have.
However, overall demand for displays was lower as COVID-19 weighed on smartphone sales. Operating losses were easily offset by purchasing monitors from people working from home.
According to Samsung Electronics, demand for mobile displays is expected to recover this year as the largest customers continue to bring new products to the market despite ongoing uncertainties surrounding the pandemic. Orders for mobile and graphics chips are also expected to increase with the release of new smartphones and game consoles, and revenue from mobile displays is expected to fully recover by the end of the year, mainly due to medium to low sales Range is attributable to smartphones.