Samsung Electronics Co., Ltd., a South Korean multinational electronics company, is reportedly anticipating a global recovery in smartphones & consumer electronics demand.
The global demand recovery is likely to drive the company’s profits in the 2nd half of 2020. This can be attributed to its shift to remote working due to the global implementation of lockdown to curb the spread of coronavirus. This also has considerably boosted its quarterly earnings. However, the company has previously announced that the ongoing COVID-19 pandemic and trade disputes may pose considerable risks to business growth.
The electronics company has recorded a 23% increase in operating profit during the Q2 of 2020, backed by a robust demand for DRAM memory chips from online service providers as well as reduced marketing costs. The prices of chips have also spiked in the Q2, owing to the rising trend of remote learning and working during the pandemic. Additionally, its chip business has surged by 60% to South Korean 5.43 trillion, accounting for 2/3rd of the total South Korean 8.1 trillion profit.
The company is expecting the chip demand to remain strong in 2020. It is also planning for product launches, including the new Galaxy Note in the 2nd half of 2020, as well as anticipating a high demand for smartphones that are compatible with 5G networks.
According to Senior VP of memory business at Samsung, Han Jin-man, rising uncertainties such as the COVID-19 pandemic, trade tensions between the U.S. and China, and shift in customers’ inventory & investment strategies may impact the DRAM prices.
Quarterly operating profit in the mobile division of Samsung rose by 25% to Won 1.95 trillion, while the revenue share dropped by 6% to South Korean 53 trillion. Huawei recently overtook the company as the biggest producer of smartphones, shipping nearly 55.8 million devices as compared to 53.7 million by Samsung.
Samsung is also expecting an improvement in the display business sector. Its shares have recently risen by 0.2%, matching its 0.2% profit in the global market.