Samsung Updates: With a 15% year-over-year increase, Samsung is expected to have its biggest April–June profit since 2018, offsetting decreased sales to smartphone manufacturers who are struggling with inflation with lingering demand from server clients for its memory chips. According to a Refinitiv Smart Estimate from 24 analysts, operating profit for the world’s largest manufacturer of smartphones and memory chips likely increased to KRW 14.46 trillion (approximately Rs. 88,000 crore) in the quarter from KRW 12.57 trillion (about 76,000 crore) roughly a year earlier.
An average of seven estimations indicates that its chip earnings likely increased by 49% to KRW 10.3 trillion (approximately Rs. 62,500 crore). About half of the revenues made by the South Korean computer behemoth come from its chip division. According to Park Sung-soon, an analyst at CAPE Investment & Securities, US data center companies including Amazon, Microsoft, Google, and Meta are anticipated to keep purchasing memory chips “to accommodate rising demand for cloud services.”
IN COMPARISON TO 2018, THESE COMPANIES’ CHIP STOCKPILES ARE NOT THAT HIGH, PARK CONTINUED.
Taiwanese contract electronics producer and Apple iPhone manufacturer Foxconn on Monday boosted its full-year estimate and said it was bullish about the third quarter, arguing for robust server demand. Nevertheless, there is a cooling off in demand for chips after two boom years when people bought smartphones and laptops to work remotely. This led to a shortage of chips and forced businesses, such as automakers, to overpay for essential chips, driving up their costs.
Additionally, the most recent COVID-19 lockdowns in China stifled consumer demand and increased inflation in the second-largest economy in the world, which led to sharp declines in smartphone sales. Consumers and businesses are also making budget cuts due to worries that key economies, like the US, may experience a slowdown as a result of high inflation and the conflict in Ukraine.
Rival memory-chipmaker Micron Technology said last week that the market had “weakened considerably in a very short period of time,” but it was optimistic about long-term demand. The company forecast much lower quarterly revenue than expected. Prices of certain DRAM chips, which are used in servers and electronic devices, declined last month by approximately 12% from a year earlier, according to data provider Trend Force, indicating lower margins for chipmakers in upcoming quarters.
Analysts predict that Samsung’s mobile business profit will have decreased by about 17% from a year ago to KRW 2.7 trillion (approximately Rs. 16,500 crore). They anticipate that the company’s smartphone shipments will have decreased from 74 million in the first quarter to between 61 million and 68 million units in the second. Gartner predicts that overall smartphone shipments to China, the largest smartphone market in the world, will decline by 18% this year.