Samsung Electronics says second quarter profit likely jumped 23% on solid chip demand, one-off gains

FILE PHOTO: The logo of Samsung Electronics in Seoul, South Korea, March 23, 2018. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) said on Tuesday second-quarter operating profit likely rose 23%, beating analysts’ estimates as solid chip sales to data centres bulking up in a work-from-home economy during the coronavirus pandemic offset weak demand for smartphones and TVs.

One-off gains from its display business also helped boost operating profit, the company said.

The South Korean tech giant said operating profit was likely 8.1 trillion won ($6.80 billion) in the quarter ended June, far above the 6.4 trillion won analyst forecast by Refinitiv SmartEstimate.

Revenue likely fell 7% to 52 trillion won from a year earlier, it said.

Work-from-home orders and growth in online learning is underpinning chip demand amid the COVID-19 pandemic and pushing up DRAM memory chip prices. U.S. DRAM supplier Micron Technology Inc (MU.O) forecast strong quarterly revenue last month.

Analysts, however, warned that increases in memory chip prices may not continue in the second half of the year as data centre customers are likely to be conservative in stockpiling chips given the resurgence of COVID-19 cases in the United States and other countries

While prices jumped 14% on average in the quarter, they were flat in June versus May, data from DRAMeXchange showed.

Shares of Samsung Electronics have dropped 1.4% so far this year versus the wider KOSPI market’s .KS11 0.4% fall.

Samsung released only limited data in Tuesday’s regulatory filing ahead of the release of its detailed earnings figures later this month.

Reporting by Heekyong Yang and Hyunjoo Jin; Editing Richard Pullin

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