07 Jul 2022, 09:50

Samsung Electronics forecasts 11.4% rise in 2Q profits

SEOUL, July 7, 2022 (BSS/AFP) - Samsung Electronics expects operating profits
in the second quarter to rise 11.4 percent, the South Korean tech giant said
in a statement Thursday, despite ongoing global supply chain woes.

The world's biggest smartphone maker forecast 2022 second-quarter operating
profits of about 14 trillion won ($10.7 billion), up from 12.6 trillion won
in the same quarter last year.

Samsung expected sales in the April-June period to have increased by 21
percent on-year to 77 trillion won. The figure would represent a downgrade
from its first-quarter sales of 77.8 trillion won.

Analysts said Samsung was helped by its continued strong performances in the
memory chip business, making up for declines in smartphone sales over the

"Samsung's smartphone shipments for the second quarter are expected to be
just over 60 million units, which is worse than expected," Park Sung-soon, an
analyst at Cape Investment & Securities, told AFP.

Samsung shipped 74.5 million smartphones in the first quarter, according to
global research firm Counterpoint, topping the global shipments market with
23 percent, trailed by Apple's 18 percent.

With memory chips now used in a wide-ranging array of devices and cloud
servers -- essential for remote working in the pandemic era -- the sector has
become less dependent on seasonally driven demand for gadgets such as
smartphones and laptops.

But concerns are growing over uncertainty in the global economic outlook due
to Russia's ongoing war in Ukraine and mounting fears of recession driven by
inflationary pressure.

Under such circumstances, it will be "hard for consumer demand for IT gadgets
to improve in the coming months", analyst Park said.

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 conglomerate's overall turnover is equivalent to about one-fifth of South
Korea's gross domestic product.

-First maker-

The world's biggest memory chip maker, Samsung Electronics has aggressively
stepped up investment in its semiconductor business as the world battles chip
shortages that have hit everything from cars and home appliances to
smartphones and gaming consoles.

Last week, the company became the first chipmaker in the world to mass-
produce advanced 3-nanometre microchips as it sought to match and eventually
outpace Taiwan's TSMC in the race to manufacture the most advanced

The new chips will be smaller, more powerful and efficient, and will be used
in high-performance computing applications before being put into gadgets such
as mobile phones.

The news came after its May announcement of a 450 trillion won investment
over the next five years to "bring forward the mass production of chips based
on the 3-nanometer process".
The vast majority of the world's most advanced microchips are made by just
two companies -- Samsung and TSMC -- both of which are running at full
capacity to alleviate a global shortage.

Samsung is the market leader in memory chips, but it has been scrambling to
catch up with TSMC in the advanced foundry business.

The supply of memory chips has garnered global geopolitical significance,
with leading governments scrambling to secure advanced chip supplies.

That was demonstrated in May when US President Joe Biden kicked off a South
Korea tour by visiting Samsung's sprawling Pyeongtaek chip plant.

Russia's invasion of Ukraine has "further spotlighted the need to secure our
critical supply chains", Biden said at the plant, underscoring the importance
of bolstering technology partnerships among "value-sharing" countries.

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