Samsung Electronics (SSNLF) forecast stronger-than-expected second quarter profits Tuesday as a surge in chip demand linked to work-from-home shifts during the coronavirus pandemic continue to offset declines in handset sales.
Samsung, the world's biggest memory chipmaker, said it sees operating profits for the three months ending in June of around 8.1 trillion Korean won ($6.8 billion), a 23% increase from the same period last year and a 26.5% improvement from the first quarter. Group revenues, Samsung forecast, should come in at around 52 trillion Korean won, a 7% slide from last year.
Earlier this spring, Samsung said its memory division will see solid profits for the 2020 financial year, but noted that would be offset by declines in its mobile phone business, which competes with Apple Inc AAPL, although the group declines to provide a detailed full-year outlook.
Analysts expect mobile handset shipments of around 59 million for the June quarter, down from around 76.3 million from the same period last year, with average selling prices rising around 20%.
Work-from-home dynamics during the coronavirus pandemic, however, has lead to a surge in demand for memory chips, as well as robust near-term price increases, which should help that portion of Samsung's business, which accounts for around two thirds of overall group profits.
Samsung shares ended the Tuesday session in Seoul 2.91% lower at 53,400 Korean won each, a move that pegs the stock's year-to-date decline at around 4.3%.
Samsung will publish a detailed second quarter earnings report during the final days of the month.