Samsung Elec's Q2 operating profit beats forecast on strong chip business

Samsung Electronics Co. said its operating profit in the second quarter likely surged more than 50%, beating market expectations, thanks to its healthy chip business.

The world’s largest memory chip and smartphone maker said the profit during the April-June period was estimated at 12.5 trillion won ($11 billion), up 53.4% from a year earlier and 33.3% from the previous quarter. The latest profit was higher than the market consensus forecast of 11 trillion won.

Revenue was estimated to have increased 18.9% on-year to 63 trillion won, according to its preliminary earnings statement released on July 7.

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Strong chip business improved the company’s earnings. Its foundry plant in Austin, US, normalized operations in the second quarter after a shutdown in the previous three months due to a cold snap, helping its chip division double operating profit in the latest quarter from a 3.4 trillion in the January-March period, analysts had predicted. The preliminary earnings suggested the division’s profit may have topped such forecasts.

DRAM prices in April increased more than 26% to $3.8 compared to a month earlier and NAND flash memory chip prices rose 8.5% in the same period on growing demand from home appliances amid the COVID-19 and increased use of corporate servers.

Its display division was estimated to post operating profit around the low-1 trillion-won level as the pandemic supported liquid crystal display (LCD) panel prices.

On the other hand, Samsung’s IT & Mobile Communications Division likely suffered a drop in operating profit to around 3 trillion won from 4.4 trillion won in the previous quarter, while the Consumer Electronics Division’s profit probably stagnated due to a decrease in TV shipments.

Samsung will release detailed quarterly earnings on July 29, according to its filing to a financial regulator.

Write to Sin-Young Park at nyusos@hankyung.com
Jongwoo Cheon edited this article.