Samsung profit rises on strong chip sales amid coronavirus
The electronics giant's second quarter benefited from a one-time gain and from demand for its processors.
Samsung's second quarter benefited from strong demand for processors.
Samsung's operating profit rose in the second quarter despite a slight decline in sales as the novel coronavirus continues to ravage the globe. The company benefited from a one-time gain and from demand for its processors.
The South Korean electronics giant reported Wednesday that its second-quarter operating profit for the three-month period that ended June 30 came in at 8.1 trillion won ($6.8 billion), an increase of more than 22% from the year-ago period. It also said its revenue declined 6% to 52.9 trillion won ($44.4 billion).
Analysts polled by Thomson Reuters expected revenue of 51.4 trillion won ($43.1 billion).
2020 was supposed to be a strong year for the phone industry, as innovations like 5G and foldable screens got people shopping again after a general weakness in the smartphone market. But financial struggles and worries about COVID-19 reduced consumer demand and the number of devices that could be manufactured. In the second quarter, revenue from Samsung's mobile division declined 18% to 19.8 trillion won.
In April, during its last quarterly earnings report, Samsung warned that the coronavirus would "significantly" hurt its operations in the coming months.The company said it expects smartphone sales to rise in the third quarter compared with the second quarter but warned that "uncertainties related to COVID-19 will continue to persist."
The company also confirmed it plans to introduce a new Galaxy Note and foldable phone at its Galaxy Unpacked event on Aug. 5. Samsung previously teased it will announce five devices at Unpacked with rumors and leaks pointing to the five being a new Note 20 line, new Galaxy Fold (rumored to be called the Z Fold 2), new Tab S7 Android tablet, a Galaxy Watch 3 and new noise-canceling earbuds called the Galaxy Buds Live.
Samsung sells more phones and TVs than any other vendor, but it also has a huge business selling memory chips to device makers around the globe. In recent months, Samsung's chip business has gotten a boost from data centers that rely on the technology to store everything we're doing online. Revenue from the company's semiconductor business increased 13% to 18.2 trillion won.
The company said its display panel business benefited from a one-time gain amid weaker demand for overall display panels. The company didn't identify the size or source of the gain, but a report earlier this month suggested that Apple may have paid a $950 million penalty for failing to purchase enough OLED panels to meet its contract.
Samsung also said it expects demand for its TVs and digital appliances to increase in the second half of 2020 over the first half as lockdowns ease and consumers release pent-up demand.