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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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EU deploys assistance for Cyprus as huge forest fire rages


NICOSIA, July 3 (Reuters) – The European Union on Saturday deployed aerial assistance to help Cyprus contain a huge forest fire raging north of the cities of Limassol and Larnaca, a blaze one official called the worst on record.

The blaze, fanned by strong winds, affected at least six communities in the foothills of the Troodos mountain range, an area of pine forest and densely vegetated shrubland.

The EU’s executive, the European Commission, said fire-fighting planes had departed from Greece to battle the fire and Italy was also planning to deploy aerial fire-fighters.

The EU’s emergency Copernicus satellite was also activated to provide damage assessment maps of the affected areas, the Commission said in a statement.

“It is the worst forest fire in the history of Cyprus,” Forestries Department Director Charalambos Alexandrou told Cyprus’s Omega TV.

Attempts were being made to prevent the blaze from crossing the mountains and stop it before reaching Machairas, a pine forestland and one of the highest peaks in Cyprus.

Alexandrou said the perimeter of the fire was “at least 40 kilometres”.

Dozens of properties were damaged, but no injuries were reported. There were widespread power cuts in the area. Plumes of smoke were visible in the capital Nicosia, some 75 km (45 miles) away.

Officials said that in addition to Greece’s assistance with two aircraft, help was also expected from Israel.

“This is a very difficult day for Cyprus. All of the state’s mechanisms are in gear, and the priority is for no loss of life,” Cypriot President Nicos Anastasiades tweeted.

Israel accepted Nicosia’s plea for help, a statement from Prime Minister Naftali Bennett said, and will send firefighting aircraft to Cyprus on Sunday.

The cause of the fire, which started around midday, was unclear. Cyprus has experienced a heatwave this week, with temperatures exceeding 40 Celsius (104 Fahrenheit). Police said they were questioning a 67 year old person in connection with the blaze.

“It passed through like a whirlwind, it destroyed everything,” said Vassos Vassiliou, the community leader of Arakapas, one of the communities affected.

Reporting by Michele Kambas, additional reporting by Maayan Lubell in Jerusalem and by John Chalmers in Brussels
Editing by Ros Russell, David Gregorio and Diane Craft

Our Standards: The Thomson Reuters Trust Principles.



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U.S. opens $3 billion aviation manufacturing wage subsidy program


A United Airlines passenger jet takes off with New York City as a backdrop, at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo

WASHINGTON, June 15 (Reuters) – The U.S. Transportation Department said Tuesday it had launched a $3 billion aviation manufacturing payroll subsidy program that will cover up to half of eligible companies’ compensation costs for as long as six months.

The program, funded by Congress, requires companies to commit to not conducting furloughs without employee consent or laying off employees covered by subsidies during the six-month period. Applications must be filed by July 13.

Companies eligible include aircraft, engine, propeller or component manufacturers and companies that repair or overhaul airplanes and parts.

The subsidy program cannot cover more than 25% of an employer’s total U.S. workforce as of April 2020 and can only cover employees with total annual compensation of $200,000 or less.

To qualify, a company must have involuntarily furloughed or laid off at least 10% of its total workforce, or have experienced at least a 15% decline in 2020 total operating revenues.

More than 100,000 jobs have been lost in the aerospace industry since the start of the COVID-19 pandemic, according to the Transportation Department. Before then, the U.S. aerospace industry was estimated to employ approximately 2.2 million workers, including 1.2 million who worked in various parts of the supply chain nationwide.

Boeing Co (BA.N), which has had extensive job cuts, Raytheon Technologies (RTX.N) and Spirit Aerosystems (SPR.N) did not immediately respond to questions about whether they are considering applying. General Electric’s (GE.N) aviation unit said it would not seek assistance from the program.

The International Association of Machinists and Aerospace Workers had strongly urged Congress to fund the program.

Congress has provided assistance to other aviation industry firms, including giving U.S. airlines $54 billion for payroll since March 2020 and that funding will continue to pay much of airline workers’ salaries through Sept. 30.

Reporting by David Shepardson
Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.



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