Samsung could report strong results for its chip business in Q2 2020

Samsung’s chip business has been its saving grace during the first quarter of this year, and it is likely to become a significant source for the company’s revenue for Q2 2020 as well. Analysts are expecting improved earnings from the South Korean tech giant’s chip business as more people have been studying and working from home during the COVID-19 pandemic.

Market analysts are expecting Samsung to post KRW 50 trillion in sales and KRW 6 trillion in operating income. Despite falling smartphone and TV sales, analysts are expecting the company to post expectation-beating results due to a rise in memory chip prices as people are streaming media and making teleconferencing calls more than ever. The demand for memory chips as at an all-time peak from consumer products as well as servers and cloud infrastructure.

Market Tracker DRAMeXchange reports that contract prices for 8Gb DDR4 DRAM rose for five months straight, from $2.84 in January 2020 to $3.31 in May 2020. So, analysts predict that profit from Samsung’s chip business will exceed KRW 5 trillion in Q2 2020, up from KRW 4 trillion in Q1 2020. A sharp fall in revenue is expected from the company’s smartphones and display business arms.

While analysts had expected a further drop in the demand for smartphones during Q2 2020, market data shows signs of recovery in June. Kim Kyung-Min, an analyst with Hana Financial Investment, said that he is raising sales estimates for Samsung’s smartphones from 50 million to 55 million. The company had sold 59 million smartphones during Q1 2020. Samsung is expected to post an operating profit of KRW 9 trillion in the third quarter of this year.

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