A South Korean flag, left, and Samsung Electronics flag fly outside the company’s headquarters in Seoul, South Korea, on July 5, 2019.
Jean Chung | Bloomberg | Getty Images
Samsung Electronics said Thursday it expects a gradual recovery in demand for its mobile devices and consumer electronics in the second half of the year.
The South Korean tech giant said that while risks remain, Samsung will respond to reviving demand through flexible supply chain management. Some of those risks include the persisting uncertainties from Covid-19, which has infected more than 17 million people worldwide, as well as growing competition.
For the memory business, demand for chips used in smartphones and gaming consoles are set to recover due to new product launches, according to Samsung. However, demand for chips used in data centers would remain uncertain due to “increased inventory levels of server customers.”
Samsung shares rose 0.17% as of 1:51 p.m. HK/SIN after the company reported earlier that its operating profit for the three months that ended in June was in line with previous guidance.
Analysts have said that the profit-making memory business has powered a lot of Samsung’s earnings recovery over the last several quarters. There is worry that data centers and cloud computing service providers may not spend as much buying new servers and memory chips for those servers in the second half of 2020. In the first half, demand for memory chips rose as the coronavirus pandemic forced millions of people to work from home and study online.
For the display panel business, where Samsung counts Apple as a customer, the firm said it expects a “full-fledged rebound in earnings from mobile displays” in the fourth quarter.
Second-quarter operating profit came in at 8.1 trillion Korean won ($6.81 billion), a 23% jump from a year ago, due to “firm demand” for memory chips and appliances as well as a one-off gain in the display business. Analysts say it was a one-time payment from Apple. Revenue fell about 6% from a year ago due to a fall in sales of smartphones and other devices.
Samsung will also unveil its new flagship smartphones including the Galaxy Note and likely a foldable device on Aug. 5 during its big “Galaxy Unpacked” event.