The chip business has long been Samsung’s cash cow. It earns the company billions of dollars every quarter. So even if other divisions see a dip in their projects, the chip business can more than make up for it.
It’s going to be a similar story for the second quarter of this year. Analysts are projecting a boost in Samsung’s Q2 2021 earnings on the back of the solid performance of its semiconductor division.
Smartphone shipments may have declined by over 20%
Market analysts in South Korea are predicting that Samsung will report strong second quarter earnings due to the stellar performance of the semiconductor business. The gains here will help offset the lukewarm performance of the mobile business.
The company is expected to post 11.2 trillion won or $9.9 billion in operating profit for the April-June 2021 period. This will be a 37.6 percent improvement compared to the same period last year. The figures stem from the data collected by 15 local brokerage houses compiled by Yonhap Infomax.
Price hikes for memory chips have helped Samsung. Higher prices have improved its margins and then increased profitability. Samsung’s DRAM average selling price increased by around 15 percent and NAND prices were up by 3 percent in the quarter. The normalization of the company’s foundry line in Austin, Texas has played a role.
The Texas fab had to be shut down for about a month due to a severe snowstorm that caused power and water outages in February. It only returned to full operations in April but the company had already suffered significant losses due to the outage.
Things aren’t looking up for the mobile business. Analysts expect that Samsung’s smartphone shipments may have declined by more than 20 percent compared to Q2 2020. That may have been due to a decline in demand in India as well as production disruption in Vietnam because of COVID19.
Samsung will release its Q2 2021 earnings guidance later this month. That’s going to give us a clearer picture before the full earnings results are released.