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Coronavirus Increases Samsung’s Chip Business Margins

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For Samsung Electronics, the production bottlenecks in the semiconductor industry had an extremely positive impact. The prices of chips shot up on the world market and brought the South Koreans a decent increase in profits.

According to the as yet unaudited balance sheets, the company is expected to post a 23 percent increase in operating profit in the second quarter compared to the same period last year. A $ 6.8 billion surplus is on the balance sheet here. Even though sales in the three months from April to June fell 7 percent to $ 43.6 billion.

The analysts had also rather expected a slight decline in profits in their forecasts. Because of the corona pandemic with its worldwide impact, the business was rather modest, which was also due to the fact that important logistics channels no longer functioned in the usual way.

Smartphone sales collapse

However, the competition also affected the problems – and in some cases even more so. This led to a noticeable shortage of semiconductor products on the world market, for which the demand is already quite high. This primarily affects storage components. The prices and thus the margins climbed properly, which brought Samsung such a decent profit boost.

In the end, Samsung was no better off than many others when it came to products for the end customer market. The company sold far fewer smartphones than usual. Initial estimates here are 55 million units delivered, which would be 27 percent less than in the same period last year. The margins in the segment are manageable anyway so that the semiconductor division was able to fill the hole quite easily. Another positive factor was that consumer electronics also went quite well and the department was able to conclude profitably. TVs, in particular, sold quite well when many people suddenly spent a lot more time at home than normal.

Mark Goodman

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