Samsung bullish on chip demand as shortages set to continue

Update of Samsung Electronics Co Ltd

Samsung Electronics said it was bullish on the outlook for its significant semiconductor business in the second half of this year, but warned that the resurgence of Covid-19 would increase supply chain risk.

The forecast is that South Korean technology group’s strong demand for electronic devices has prolonged the global chip shortage, resulting in net profit of 96 trillion won ($ 8.4 billion) in the second quarter, up 73% from the previous year. After reporting that.

“We expect market conditions for the parts business to improve in the second half of the year,” the company said Thursday. “But the ongoing disruption of component supply and the risk of uncertainty associated with Covid-19 may continue.”

The world’s largest producers of memory chips, smartphones and electronic displays reported a year-on-year surge in all major businesses. However, supply chain risks are increasing in Vietnam, which is an important production base for smartphones and home appliances.

Samsung was forced to cut production at one of its consumer electronics factories in Ho Chi Minh City earlier this month, but smartphone production was also suspended.

Operating profit in the semiconductor business increased 28% year-on-year to 6.9 trillion won as data center operators and PC makers rushed to secure inventories, accounting for more than half of the company’s gross profit. The company said memory chip inventories have fallen to “significantly lower levels.”

Analysts expect the chip shortage to continue in the second half of the year, but believe the industry has survived the worst crisis. “Samsung’s earnings will increase further in the third quarter, when the memory boom continues,” said CW Chung, head of research at Nomura in Seoul. “Chip prices are likely to slow down, but will continue to rise in the second half of the year.”

Samsung has dominated the production of drum chips and nando chips for decades. SK Securities analyst Kim Young-woo expects drum prices to rise 12-15% in the second half and Nando prices to rise 7-11%. Dram enables short-term storage of graphics, mobile and server chips, and Nand allows files and data to be stored without power.

However, Samsung smartphone sales fell 24% quarter-on-quarter due to chip shortages and supply chain disruptions. Samsung’s rival Apple reported that iPhone sales surged 50% in the April-June quarter, avoiding the worst chip shortages by US companies.

However, Samsung plans to launch a new foldable mobile phone next month, so mobile sales are expected to increase in the second half of the year. The company also expects the mobile display business to improve revenue in the second half of the year as large customers, including Apple, launch new flagship models.

Samsung bullish on chip demand as shortages set to continue Source link Samsung bullish on chip demand as shortages set to continue

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