Samsung Electronics Co., the world’s largest maker of memory chips and smartphones, reported preliminary results for the second quarter of 2022 on Thursday. The company expects could report its best second-quarter results in four years on the back of strong demand for chips.
In its guidance, Samsung estimated its second-quarter operating profit at 14 trillion won ($10.73 billion), up 11.38 percent from a year earlier, but below analysts’ average estimate of 14.45 trillion won ($11.56 billion).
However, it would be Samsung’s highest operating profit for the second quarter since 2018, which was 12.57 trillion won ($10.06 billion) in the same period last year. Samsung also said in a brief preliminary earnings report that the company’s revenue could rise 21 percent from a year earlier to 77 trillion won ($61.6 billion), largely in line with market expectations of 76.7 trillion won.
Strong demand for memory chips used in servers and data centers continued to underpin Samsung’s outstanding performance in the second quarter. During the period, global shipments of DRAM and NAND flash increased by 9% and 2%, respectively, from the same period last year.
In a brief statement, Samsung explained that operating profit was lower than expected, mainly because inflation led to a decline in smartphone and TV sales, which in turn affected profits from massive purchases of memory chips by server customers.
Samsung shipped an estimated 61 million smartphones in the second quarter, down 16 percent from the previous quarter. Operating profit for the business is expected to be 2.6 trillion won ($2.08 billion), down 600 billion won ($480 million) from a year earlier.
Analysts are pessimistic about the second half of the year as the ongoing conflict in Ukraine, rising inflation, and the Covid-19 pandemic are weighing on demand and further squeezing consumer spending.
Worldwide shipments of consumer devices such as mobile phones and personal computers will fall 7.6 percent this year, according to technology research firm Gartner. This gloomy outlook also raises concerns that the semiconductor industry is entering a downward cycle amid weak demand and excess inventory.
Samsung did not break down the results of its various business units, but it will report detailed second-quarter results later this month.
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