Samsung could archive the best second quarter since 2018 with 15% profit increase on an annual basis, since the persistent demand for chips of memory from customers running servers compensates for the decline in sales to smartphone manufacturers caused by inflation. Reuters writes it, specifying that – according to an estimate by Refinitiv SmartEstimate of 24 analysts – operating profit Samsung's share likely jumped to 14,46 trillion won ($11,2 billion) in the second quarter, from 12,57 trillion won in the same period last year. An average of seven estimates expect chip sales to rise by 49%, to 10,3 trillion won.
The chip business
Il chip business accounts for about half of profits of the South Korean tech giant. As for the overall outlook for global demand for memory chips, Park Sung-soon, analyst at CAPE Investment & Securities, said US giants such as Amazon, Microsoft, Google and Meta should continue shopping “to meet the growing demand for cloud services”. In fact, these companies' chip inventories aren't high compared to 2018 levels, Park added.
At the same time though, chip makers around the world have to contend with a question in the cooling phase after two years of a pandemic where people bought smartphones and computers to work from home. This phenomenon of exceptional scope is the first cause of the current one shortage of chips globally it did go up the price processors essential for many companies, starting with car manufacturers.
Samsung smartphone sales are down
Also, the recent blocks in China related to Covid have stifled consumer demand and increased inflation in the second largest economy on the planet, causing steep declines in smartphone sales. Concerns about a downturn in major markets, including the US, due to high inflation and the war in Ukraine are also driving consumers and businesses to tighten budgets.
According to analysts, also in the second quarter, the profit of Samsung's mobile business is expected to have fallen by about 17% year-on-year, to 2,7 trillion won. Smartphone sales are expected to have fallen between 61 million and 68 million units, from 74 million in the former. Samsung shares, which will announce preliminary results on Thursday, are down about 27% this year, versus a 38% drop in the Philadelphia Semiconductor Index.
