Samsung sees chip recovery in Q2 after strong Q1 results

Samsung Electronics on Thursday expected its semiconductor business to rebound in the current quarter following mediocre performance, although its mobile unit is projected to suffer a profit decline after spearheading its strong first-quarter earnings.

Samsung’s net profit stood at $6.4 billion in the January-March period, up 46.2 per cent from a year earlier, the world’s largest memory chip and smartphone vendor said in a regulatory filing.

Its operating profit jumped 45.5 per cent on-year to 9.38 trillion won in the first quarter of the year. Sales rose 18.2 per cent on-year to 65.38 trillion won, the largest-ever figure for any first quarter.

The figures were in line with its earnings guidance announced earlier this month that beat the market consensus.

Samsung said its upbeat performance came as smartphone sales soared on the back of new handset launches, while its chip business suffered from a monthlong shutdown of the company’s semiconductor plant in Austin, Texas, where a severe winter storm caused a power outage in February.

“The memory business saw a slight profit decline due to a downward trend in NAND prices and investment for new production lines, despite overall decent demand backed by server and mobile products,” the company said.

“The foundry business saw its earnings decline in the first quarter due to a disruption of production at the Austin fab in the U.S. from a major power outage.”

However, the company said its semiconductor unit is projected to see improved earnings in the second quarter on the back of strong server demand, reports Yonhap news agency.

Samsung said its Austin factory has been fully normalised and that that will boost its foundry business, although its System LSI unit will still be suffering from the impact of foundry disruption.

Samsung’s IT & Mobile Communications (IM) division was the top performer in the first quarter, racking up revenue of 29.21 trillion won, up 12.34 percent from a year earlier, while operating profit soared 65.66 percent on-year to 4.39 trillion won.

The company, however, expected its mobile business to see weak earnings in the second quarter due to diminishing new product effects for the flagship model and component supply shortage issues.

The Consumer Electronics (CE) division, comprised of the Visual Display and Digital Appliances businesses, posted its best-ever first-quarter performance as it logged 12.99 trillion won in sales, up 26.11 percent from a year earlier, while operating income more than doubled from a year ago to reach 1.12 trillion won.

For the second quarter, Samsung expected TV demand to increase from a year ago as major sporting events, such as the Tokyo Olympic Games and the UEFA Euro 2020 football competition, are expected to take place.

Samsung expected its mobile panel sales to decline in the second quarter due to weak seasonality for smartphones and the effects of some component shortages.