Samsung Electronics Co. today reported a lower-than-expected rise in its fiscal second-quarter operating profit, with reduced smartphone sales dragging down its bottom line despite strong demand for its server chips.

In its preliminary earnings guidance for the second quarter, the company estimated its operating profit at 14 trillion won ($11 billion), up 11% from a year earlier but just below the analyst consensus of 14.5 trillion won.

Despite the miss, Samsung said it was its best second-quarter earnings performance in four years. The company projected total sales in the quarter of 77 trillion won, up 21% from a year ago and just above the consensus estimate of 76.7 trillion won.

Samsung, which is the world’s largest manufacturer of both memory chips and smartphones, did not offer a detailed breakdown of its respective business units, with its full earnings report set to come later this month.

However, it’s known that Samsung continued to see strong demand for its memory chips in the quarter. The company manufactures both dynamic random-access memory, which is used in personal computers and servers, and NAND flash memory chips for smaller devices such as smartphones and USB drives. During the quarter, global shipments of DRAM rose by 9%, while NAND shipments increased 2%, Yonhap reported.

Dragging on Samsung’’s profits, however, were inflation-hit smartphone sales. Yonhap said a drop in consumer spending has resulted in lower sales of smartphones and other products, such as TVs. As a result, Samsung’s income took a big hit.

Analysts estimate Samsung’s smartphone shipments at 61 million units, down 16% from the previous quarter. As such, the business unit’s operating profit is likely to fall to 2.6 trillion won, down from 3.2 trillion won one year ago.

Samsung is bracing itself for further declines later in the year, with the ongoing war in Ukraine, increased inflation and ongoing COVID-19-related lockdowns in China battering the global economy and reducing consumer spending. In light of these problems, Gartner Inc. recently forecast a 7.6% decline in shipments of consumer electronic devices such as smartphones and PCs.

Fears are rising that the negative outlook could have a knock-on effect in the semiconductor industry, leading to weaker demand as consumer electronics brands struggle to shift their existing inventories. One of Samsung’s biggest rivals in the memory chip market, Micron Technology Inc., last week warned investors that it expects its fiscal fourth-quarter earnings and revenue to fall some way short of expectations.

Photo: Samsung

Show your support for our mission by joining our Cube Club and Cube Event Community of experts. Join the community that includes Amazon Web Services and Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger and many more luminaries and experts.


Source link

Load More By Michael Smith
Load More In Technology
Comments are closed.

Check Also

Autocar magazine 1 February: on sale now

[ad_1] This week in Autocar, we put Porsche’s new 911 ‘SUV’ through its paces, break the s…