South Korean tech giant Samsung Electronics challenged the coronavirus to report higher net profits in the second quarter on Thursday, with strong demand for memory chips outpacing the pandemic’s impact on smartphone sales.
Long known as the world’s largest maker of smartphones and memory chips, it said net profit rose 7.3 percent to 5.56 trillion won ($ 4.66 billion) in the period from April to June.
The firm is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in the world’s 12th largest economy, and is crucial to the economic health of the South.
The figures, which exceeded expectations according to Bloomberg News, come as the coronavirus pandemic wreaks havoc on the world economy and the trade-dependent South went into recession for the first time in 17 years due to falling exports.
But the blockades imposed around the world, especially in Europe and the US, have fueled Samsung Electronics’ chip business with data centers moving to store DRAM chips to meet the growing demand for online activities.
“Even when the spread of COVID-19 caused closings and slowdowns in stores and production sites worldwide, the company responded to the challenges through its extensive global supply chain,” the firm said in a statement.
It also minimized the impact of the pandemic by “strengthening online sales channels and optimizing costs,” he added.
Operating profit rose 23.48 percent to 8.15 trillion won, he said, even as sales fell 5.6 percent to 52.97 trillion won.
Overall turnover for Samsung’s largest group is equivalent to a fifth of South Korea’s gross domestic product.
Analysts said they expect Samsung Electronics’ memory chips and television businesses to improve.
Diplomatic and military tensions between India and China could also play in Samsung’s favor, analysts say, if Indian consumers choose to reject Chinese brands and opt for Samsung devices.
“Growth is likely to be driven by memory chips and displays as both products are in high demand due to heavy content consumption during the shutdown,” Prachir Singh, senior analyst at market watcher Counterpoint, told AFP.
“India is showing pent-up demand as the country recovers in the post-closing period.
“There is certainly an anti-China sentiment on the minds of Indian consumers. Samsung is surely benefiting from this. ”
– Huawei advances –
Samsung has long been considered the world’s largest smartphone maker, but industry tracker Canalys said Thursday that it was overtaken in the second quarter by Chinese rival Huawei, in the wake of strong domestic demand in the second economy. biggest in the world.
But as the world economy recovers, Huawei may have a hard time keeping top spot in the face of U.S. sanctions and falling overseas sales, Canalys added.
Samsung Electronics declined to comment on the ranking to AFP.
Global smartphone sales fell more than 20 percent year-on-year in the first quarter, its worst performance, according to market tracker Gartner, as the pandemic hit consumer spending.
And for the second half of the year, the prospects for Samsung mobiles “are still quite uncertain because, although the blockades in some countries are decreasing, there is a resurgence of cases in some places,” said Gloria Tsuen, credit director at Moody’s Investors. Service.
LG Electronics, South Korea’s second-largest home appliance company after Samsung, posted a second-quarter net profit drop from 38.1 percent to 65.6 billion won on Thursday, saying the pandemic had ” significantly affected. “
In addition to the challenges of Samsung Electronics, its vice president and de facto leader Lee Jae-yong is being tried for a corruption scandal that could lead to prison.
He is not in custody during the process, but a guilty verdict could deprive the company of its main responsibility.
Samsung shares closed unchanged in Seoul on Thursday at 59,000 won.