Samsung Electronics logs 73% profit surge on back of higher chip prices

SEOUL – Samsung Electronics’ net profits surged more than 70% in the second quarter thanks to higher chip prices on the back of continuing pandemic-led demand, reported the South Korean tech giant today.

The world’s biggest smartphone maker saw net profits rise 73.4% to 9.6 trillion won (RM35.5 billion) for the April-June period on-year, said the company in a regulatory filing.

Operating profit increased 54.3% to 12.6 trillion won in the second quarter from 8.1 trillion won tallied a year earlier.

It is slightly more than the 12.5 trillion won estimated by Samsung earlier this month.

The firm attributed the growth to favourable market conditions for memory chips, noting a “significant improvement in earnings as memory shipments exceeded previous guidance, and price increases were higher than expected”.

Covid-19 has wreaked havoc on the world economy, with lockdowns and travel bans imposed around the globe for many months.

But the pandemic, which has killed over four million people worldwide, has also seen many tech companies boom.

Coronavirus-driven work-from-home arrangements have boosted demand for devices powered by Samsung’s memory chips, as well as home appliances like TVs and washing machines.

The strong results come despite Samsung seeing earnings from its smartphone business decline on-quarter because of supply chain problems, which have disrupted production at many global firms.

It painted an optimistic view for the remainder of the year, anticipating favourable market conditions with continued demand for memory chips for the server and mobile markets. 

But, it warned of persisting uncertainty associated with the pandemic going into the second half, noting “continued disruptions in component supply, and uncertainties... are likely to persist”.

Samsung Electronics is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as “chaebols” that dominate business in South Korea, the world’s 12th-largest economy.

The conglomerate’s overall turnover is equivalent to a fifth of gross domestic product. – AFP, July 29, 2021