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Samsung sees quarterly profit jump thanks to microchips

2021-07-29T08:53:34.018Z

The rise in chip prices linked to very strong demand allowed the mobile giant to jump more than 70% in its net profit in the second quarter.



South Korean giant Samsung Electronics on Thursday announced a jump of more than 70% in its net profit in the second quarter due to the rise in chip prices linked to very strong demand during a pandemic.

The rise of work at home has boosted demand for devices running on semiconductors produced by the South Korean juggernaut.

"

Memory sales have exceeded expectations and the price increase has been stronger than expected,

" said the group.

Read also: Samsung sets out to regain its leadership in smartphones

The world's largest smartphone maker saw its net profit increase 73.4 percent to 9.6 trillion won (€ 7.07 billion) for the April to June period year-on-year, the group said in a statement. Operating profit rose 54.3 percent to 12.6 trillion won, slightly more than the 12.5 trillion won the group expected earlier this month. These good results were achieved despite lower profits in the smartphone business due to supply chain issues that disrupted global production.

Samsung Electronics is the flagship of the Samsung group, which is by far the largest of the family conglomerates, the “

chaebols

”, which dominate the 12th largest economy in the world. The turnover of the group as a whole is equivalent to one fifth of the national GDP. Experts say the share of the semiconductor division's profits in the profits of the entire group is expected to increase in the coming months. "

Samsung will benefit from memory prices which will probably rise further in the third and fourth quarters,

" Park Sung-soon, an expert at Cape Investment & Securities, told AFP.

Samsung Electronics anticipates still favorable market conditions by the end of the year with continued strong demand for memory chips for servers and mobile phones.

But the pandemic continues to represent a source of uncertainty, he admits, warning that "

disruptions in the supply of components and uncertainties (...) will probably continue

".

The pandemic has paralyzed the global economy due to multiple lockdowns and border closures since early 2020 but it has also benefited many technology companies.

Teleworking has in particular boosted demand for devices with Samsung chips as well as domestic equipment such as televisions and household appliances.

The increasingly competitive foldable smartphone market

Samsung is expected to present the latest model of its Galaxy Z foldable smartphone and clamshell variant, the Galaxy Z Flip, next month.

The foldable phone sector is increasingly competitive, particularly with products from the Chinese Huawei and Xiaomi.

Samsung, however, intends to consolidate its position in the field of smartphones "

with the release of its premium range, but also with less expensive devices in the third quarter

", explains James Kang, of Euromonitor International.

James Kang, however, anticipates turbulence to come next year for the South Korean giant because demand is expected to be less strong than in 2021.

The group remains however entangled in legal setbacks.

Its de facto boss Lee Jae-yong is currently on trial for the controversial merger of two subsidiaries that has favored his takeover of the conglomerate.

The heir is currently serving a two-and-a-half-year prison sentence for corruption and embezzlement in the resounding scandal that led to the impeachment and subsequent incarceration of former South Korean President Park Geun-hye.

Voices in business and academia believe that this vacancy at the head of the group could affect the decision-making process in the context of large investments, which have been of great importance to the global rise of Samsung. .

Lee Jae-yong will be eligible for early release next month.

Source: lefigaro

All business articles on 2021-07-29

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