Despite a cooling smartphone market, Samsung recorded its best second-quarter profit since 2018, thanks on the strong sales of chips, as per CNET.
According to the Korea-based company, they notched a 12% increase in this year's second-quarter profit compared to the same time last year.
Samsung announced on Wednesday that its operating profit for the three-month period that ended on June 30 amounted to around 14.1 trillion won ($10.8 billion).
Meanwhile, the company recorded 77.2 trillion won ($59.1 billion) revenue for the second-quarter, with an increase of more than 21%.
People walk past the Samsung logo displayed on a glass door at the company's Seocho building in Seoul on April 28, 2022. (Photo by Jung Yeon-je / AFP) (Photo by JUNG YEON-JE/AFP via Getty Images)
Samsung Plans to Expand Its Flagship Sales
A decline is observed in the company's earnings on mobile business compared to the first quarter. This can be attributed to the increase in the costs of components.
However, revenue is observed to increase by 31% year over year due to the strong sales of flagship models including the Galaxy S22 series and the Galaxy Tab S8 series.
According to Samsung, in the second half of the year, the company expects that the smartphone market will hold steady or show single-digit growth.
Moreover, Samsung also said that it is planning to do an expansion of flagship sales with a line of new foldables. The company is expected to release it new line of flagship in the upcoming Unpacked event that will happen next month.
The demand for smartphones is plunging in the second quarter. In fact, in the second quarter, smartphone sellers only shipped 270 million handsets. This recorded a 9% decline over the first quarter.
"Economic headwinds, sluggish demand, and inventory pileup have resulted in vendors rapidly reassessing their portfolio strategies for the rest of 2022," Canalys Research Analyst Runar Bjørhovde said in a report, as per CNET.
Bjørhovde added that it possible that the oversupplied mid-range is a factor why vendors place their attention on adjusting to new launches. With this, consumers with limited budget choose the lower end devices.
Read Also: Samsung Electronics Sees Third Quarter Profit Boost Despite Smartphone Woes
Samsung Cautions Decline in PC and Consumer Products.
While Samsung is widely known as a creator of phone and TV, the company also markets memory chips. Samsung benefited in the second quarter from continued strong demand for server memory.
Meanwhile, the demand for consumer products weakened. However, the sales in Samsung memory units still managed to rise to 18% year over year.
Despite of the increase, Samsung warned that "demand for consumer products and PCs will remain weak," as per CNET.
Samsung said that when it comes to PC, there is a looming possibility that the plummet in demand may extend to enterprise segments.
However, the company also noted that there is also a possibility that the consumer demand will get stimulated during the year-end promotional season.
The company's strong quarter came while chipmakers face an excessive supply. This is while the demand for smartphones and PCs declines.
According to market researcher TrendForce, the prices for DRAM chips, which are typically used in PCs, were expected to decrease by about 5% in the second quarter. It is expected to decline further to 10% in the third quarter.
Likewise, prices for NAND Flash memory, which is commonly used in portable consumer devices, were expected to plunge about 5% this quarter. By third quarter, a 10% decline is expected, TrendForce predicted.
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