Samsung ‘To See Profits Jump’ On Data Centre Demand

Industry analysts expect Samsung’s profits to jump 15 percent for the second quarter as strong data centre demand offsets smartphone slump

Samsung Electronics is likely to see a more than 15 percent rise in operating profits in spite of weakening consumer demand, due to strong sales of semiconductors for data centres, analysts have predicted.

The company, the largest memory chip maker in the world, is set to see 14.5 trillion won ($11.1bn, $9.17bn) in operating profit for the April to June period, according to a survey of analysts by Yonhap News Agency.

A Refinitiv poll of 24 analysts returned similar figures.

The figure represents a 15 percent year-on-year rise and would be Samsung Electronics’ best April-June profit since 2018.

A data centre, storage, serverData centre demand

Yonhap’s analysts predicted sales at Samsung’s chip business would grow 42 percent to 9.8tn won, with Refinitiv predicting a 49 percent rise to 10.3tn won.

Global shipments of DRAM and NAND Flash both are likely to have grown during the three-month period by 9 percent and 2 percent year-on-year respencitvely, Yonhap reported.

Samsung’s second quarter sales overall are estimated to grow by 20.6 percent to 76.8tn won, with net income jumping 19.8 percent to 11.5tn won, Yonhap said.

Cape Investment & Securities analyst Park Sung-soon said demand from data centre firms including Amazon, Microsoft, Google and Meta Platforms is expected to continue to be strong amidst expanding demand for cloud services.

Smartphone slump

The growth in chip sales is likely to have offset slower consumer spending that has affected sales of smartphones and home appliances.

Samsung’s smartphone shipments are estimated to reach 61 million units for the second quarter, down 16 percent from the previous quarter, Yonhap said.

Operating profit at the smartphone division is likely to drop by 600bn won year-on-year to 2.6tn won.

Analysts say the war in Ukraine, rising inflation and China’s Covid-19 lockdowns are dragging on consumer spending, a trend expected to intensify in the second half of the year.

Consumer demand

Global shipments of consumer devices including mobile phones and PCs are expected to decline 7.6 percent this year, research firm Gartner has predicted, with smartphone shipments to China, the biggest smartphone market, expected to shrink by 18 percent.

“A perfect storm of geopolitics upheaval, high inflation, currency fluctuations and supply chain disruptions have lowered business and consumer demand for devices across the world, and is set to impact the PC market and the hardest in 2022,” said Gartner analyst Ranjit Atwal in a research note.

Samsung is to announce its preliminary earnings for the second quarter on Thursday.