Samsung Electronics increased operating profit by 11 percent to about 14 trillion Win (10.6 billion euros) in the second quarter of the fiscal year. For the South Korean model company, it is the best result in the period from April to June since 2018. On the stock exchange, the company’s share price rose up to 3.2 percent in morning trading.
Investors seemed pleased with the significant growth – despite the global difficulties in the supply chains, despite the corona lockdowns in China, despite the inflationary pressure, despite the Ukraine war and despite the cooling market for mobile phones and computers. After Samsung’s quarterly results, the share prices of local competitor SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan rose significantly.
hard time ahead
On the financial markets, the electronics industry is expected to be heading for a more difficult time after two years of strong growth during the corona pandemic. The second quarter could prove to be a warning sign. The 11 percent increase in Samsung operating profit pales in comparison to operating profit growth rates averaging 42 percent since spring 2020. It is the first time since spring 2020 that Samsung’s operating profit has grown less than 20 percent.
In the earnings estimate, Samsung also reported an increase in quarterly sales compared to the same quarter of the previous year by 21 percent to around 77 trillion won. The increase in operating profit is partly due to the fact that the Korean won depreciated against the US dollar in the second quarter. Samsung will not release details until the end of the month when it will present the full quarterly report.
The South Korean electronics group is the largest manufacturer of electronic memory components and a leading manufacturer of smartphones. The business results of the company are also considered an indicator for the entire industry. Showing more cautious expectations, Samsung’s share price is down 27 percent year-to-date. In the entire semiconductor industry, the stock indicators are currently trending downwards.
Analysts suspect that the lion’s share of Samsung’s quarterly profit once again came from its semiconductor business. Large providers of data centers and online data services continue to demand memory chips, while demand from the portable electronics or computer business is currently slowing down. Stocks of electronic chips in South Korea were 53 percent higher in May than a year ago, according to the statistical office. In addition to Samsung, this also affects SK Hynix, another major supplier of memory chips. The prices for volatile and non-volatile memory components (DRAM and NAND) are currently showing a downward trend.