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Samsung Electronics Q2 profit likely up 38% on strong chip prices


People wears masks in front of a Samsung store at a main shopping area as the country is hit by an outbreak of the new coronavirus in downtown Shanghai, China February 21, 2020. REUTERS/Aly Song/File Photo

  • Q2 operating profit estimated at 11.3 trln won
  • Surging chip prices, shipments boost profit
  • Revenue estimated up 15.4%
  • Smartphones shipments likely fell on quarter

SEOUL, July 6 (Reuters) – Samsung Electronics Co Ltd (005930.KS) likely saw a 38% surge in profit for the April-June quarter thanks to strong chip prices and demand spurred by a pandemic-led consumer appetite for electronics as well as recovering investment in data centres.

Operating profit for the world’s biggest memory chip and smartphone maker likely jumped to 11.3 trillion won ($10 billion), according to a Refinitiv SmartEstimate drawn from 20 analysts and weighted toward those who are more consistently accurate.

The South Korean tech giant’s strong performance – coming despite it shipping fewer smartphones than in January-March – underscores the stratospheric demand for chips that has depleted stockpiles and filled production capacity.

The result would be up 20% from the first quarter and mark Samsung’s highest operating income for the second quarter since 2018. Revenue likely rose 15.4%.

Samsung is scheduled to announce preliminary second-quarter results on Wednesday.

The company’s chip division likely benefited from memory chip price hikes that exceeded market estimates, analysts said, while shipments grew as well.

Prices of DRAM chips, widely used in servers, mobile phones and other computing devices, jumped 27% compared to the March quarter, while those of NAND flash chips that serve the data storage market rose 8.6%, according to research provider Trendforce.

Profit also improved at Samsung’s chip-contract manufacturing and logic chip design business, partly because operations at its storm-hit Texas factory returned to normal, analysts said.

They estimated the chip division’s operating profit in April-June rose about 22% from the year-earlier period to about 6.6 trillion won.

Still, Samsung’s smartphone shipments dropped to about 59 million in April-June from about 76 million in the first quarter, according to Shinyoung Investment & Securities, as sales slowed for its latest flagship model, launched in mid-January.

Reduced demand from India, hard hit by the pandemic during the quarter, as well as tight supply for some mobile processor chips may also have affected shipments, analysts said, estimating the mobile business’ operating profit at about 2.9 trillion won.

($1 = 1,129.2800 won)

Reporting by Joyce Lee; Additional reporting by Heekyong Yang; Editing by Sayantani Ghosh and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.



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China’s Huawei reports quarterly revenue drop as smartphone income hit


A Huawei logo is seen at the Mobile World Congress (MWC) in Shanghai, China February 23, 2021. REUTERS/Aly Song/File Photo

China’s Huawei Technologies (HWT.UL) saw revenue fall 16.5% in the first quarter compared to a year earlier, hurt by a dip in sales after selling its budget smartphone unit Honor in November.

Revenues were 152.2 billion yuan ($23.46 billion) in the first quarter, it said on Wednesday.

But net profit margin rose 3.8 percentage points compared to a year earlier to 11.1%, it said, as the company cut costs and received a boost from $600 million in royalty payments.

“2021 will be a challenging year for us, but it’s also the year that our future development strategy will begin to take shape,” Huawei’s rotating chairman Eric Xu said in the statement.

Huawei was put on an export blacklist by former U.S. President Donald Trump in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors.

The ban put Huawei’s once lucrative handset business under immense pressure, prompting the sale of its Honor budget smartphone unit to a group of agents and dealers in November.

The loss of sales from Honor contributed to the drop in quarterly revenue, the company said.

In March, Huawei had posted a 3.2% rise in profits in 2020, largely driven by its home market.

But its business declined elsewhere in 2020, with revenues down 12.2% to 180.8 billion yuan in Europe, the Middle East and Africa, down 8.7% to 64.4 billion yuan in the rest of Asia, and down 24.5% to 39.6 billion yuan from the Americas.

The company is investing heavily in businesses that are less reliant on U.S. chip technology such as autonomous driving technology and cloud computing, Xu said this month. read more

($1 = 6.4866 Chinese yuan renminbi)

Our Standards: The Thomson Reuters Trust Principles.



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