Samsung Electronics reported revenue of 63.7 trillion won (+20 percent) and net profit of 9.6 trillion won (+73 percent) in the second quarter of 2021.
Samsung did not reveal specific revenue details about the Networks Business that supports telecom operators worldwide. The Networks Business improved performance compared to the previous quarter backed by growth of its North America business and 5G networks expansion in South Korea.
Samsung said the Networks Business will drive revenue growth in key telecom markets, including North America and Japan, and explore new opportunities in Europe and and other markets.
Samsung forecast strong demand for memory chips in the second half and a recovery in the mobile market to 2019 levels. Samsung indicates there will be some expansion of mass market 5G smartphones. The price of 5G smartphone is a key challenge for global smartphone makers.
The world’s top maker of memory chips and smartphones posted a 54 percent jump in operating profit for the second quarter, its strongest result in more than two years, supported by high chip prices and better than expected demand.
“Market conditions are expected to be favourable for the component business for the second half,” Samsung said in a statement. “Memory demand will likely be buoyed by new smartphone model launches, with wider 5G availability driving growth.”
Samsung cautioned that a global shortage of non-memory chips still poses a risk to forecasts, while uncertainties related to COVID-19 are likely to persist.
Apple said it expected the impact of the chip shortage to worsen in the fourth quarter and extend to iPhone production.
Samsung plans to unveil its foldable smartphone on Aug. 11, which is expected to be compatible with a stylus specifically designed for foldable phones.
Samsung pointed to strong fundamentals for the memory chip market on increasing 5G adoption, new smartphone model launches, and sustained demand for servers and PCs. It noted its chip inventory has fallen after it shipped more chips than previously expected in the second quarter.
“Samsung will see solid third quarter results as DRAM prices spike further and display sales rise on new smartphone launches including from Apple. The unknown variable is smartphone sales,” said Park Sung-soon, analyst at Cape Investment & Securities.
Samsung’s operating profit in the April-June quarter of 12.6 trillion won ($10.95 billion) was the company’s best result since the third quarter of 2018.
Mobile profits dipped from the previous quarter due to constrained supply of mobile processor chips and production disruptions related to the pandemic.
Samsung’s capital expenditures in the second quarter reached KRW 13.6 trillion, including KRW 12.5 trillion spent on semiconductors and KRW 0.6 trillion on displays. Total capital expenditures in the first half were KRW 23.3 trillion, including KRW 20.9 trillion for semiconductors and KRW 1.4 trillion for displays.
Samsung said its Investment in the Memory Business was spent mainly on addressing future demand through capacity expansion and process migrations to advanced nodes. Investment in the Foundry Business focused on expansion for advanced processes such as 5-nm EUV lithography.