Samsung forecasts strong chip demand in second half

SEOUL — Samsung Electronics — the sector’s greatest maker of reminiscence chips — stated Thursday that sturdy call for for its semiconductors will proceed thru the remainder of the yr as world shoppers construct inventories sooner than costs cross up additional.

“The reminiscence trade is predicted to peer persisted call for enlargement for server and cell merchandise,” Samsung stated in a observation because it launched profits effects for the second one quarter.

“Call for for key Gadget LSI merchandise is predicted to extend as new smartphones are offered, whilst the foundry trade will boost up enlargement by means of increasing the Pyeongtaek S5 Line capability,” it added, relating to a home manufacturing facility.

The outlook comes because the South Korean corporate revised up its second-quarter working benefit consequence to a achieve of 54.3% from the similar duration ultimate yr, at the again of robust chip call for amid the coronavirus pandemic, greater than making up for falling smartphone gross sales.

Running benefit rose to twelve.6 trillion received ($11 billion) within the April to June quarter, up 54.3% from the similar duration ultimate yr, reasonably upper than profits steerage issued previous this month. Samsung’s income, in the meantime, jumped 20.2% to 63.7 trillion received all over the similar duration.

Quarter on quarter, working benefit climbed 33.9%, whilst income dropped 2.6%. Internet benefit, in the meantime, soared 73.4% to 9.6 trillion received, the corporate stated. The ground-line determine was once no longer integrated within the previous steerage.

Samsung stated its semiconductor department led the powerful efficiency because of sharply upper costs for reminiscence chips, sponsored by means of heavy call for. Nomura estimated that DRAM costs can have jumped greater than 20% in the second one quarter from the former quarter.

“We think that reminiscence chip call for for stock buildup will proceed, even if the extent of stock differs by means of shoppers,” Han Jin-man, a Samsung vice chairman, stated on a convention name to speak about the profits.

Analysts say an ongoing chip scarcity that had disrupted numerous industries together with vehicles is prone to proceed, even though rapid wishes had been met, because of expanding digitalization of each the house and the place of business.

“What began as a pattern towards faraway paintings because of social restrictions imposed to counter the pandemic has now turn out to be the norm in lots of puts,” Timothy Uy, an affiliate director at Moody’s Analytics, stated in a file on Wednesday. “The capital investments made to transport to the cloud and digitize operations are prone to handiest building up over the years, fueling additional call for for semiconductors, in particular the ones on the most sensible finish of the spectrum.”

Samsung stated its effects additionally were given a spice up from a one-time achieve in its show trade. The corporate did supply main points, however analysts say that this is a penalty fee of about 1 trillion received by means of Apple to Samsung Show, its panel-making associate. Apple will pay repayment to Samsung when it can not order as many presentations as promised. Samsung provides complicated natural light-emitting diode (OLED) panels for Apple’s iPhones.

Nikkei Asia left a message with Apple’s workplace in South Korea in search of remark.

The profits consequence was once no longer all just right information for Samsung, alternatively. Its smartphone gross sales dropped 22% to 21.4 trillion received in the second one quarter from the former one, hit by means of weaker call for from India and a manufacturing suspension in Vietnam.

However the corporate stated at the convention name that it may restart its smartphone production traces by means of the top of this month within the Southeast Asian nation, the place it needed to halt them because of an endemic lockdown.

Aiming for a rebound within the cell trade, the corporate plans to unveil its foldable Galaxy smartphone fashions subsequent month. Marketplace watchers say the corporate might lower costs for its new lineup to draw extra shoppers.

Samsung is the sector’s greatest smartphone producer with 22% of the worldwide marketplace within the first quarter, adopted by means of Apple at 17%, in step with Counterpoint Analysis.

TrendForce diminished its enlargement forecast for world smartphone manufacturing to eight.5% this yr from the former prediction of 9.4% enlargement, as a moment wave of COVID-19 infections swept throughout India this yr.

Samsung stocks closed down 0.25% to 79,000 received on Thursday.

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