Samsung net up 15 percent as strong chips balance weak phones
Samsung Electronics reported a solid second quarter as strong semiconductor results made up for weaknesses in consumer electronics and smartphones.
The company, which has been talking up investment plans in recent months along with other large companies, warned that it may have to adjust near-term plans given economic and industry conditions.
Sales came in at 77.2 trillion won ($59.3 billion) during the April-June period, up 21.3 percent over the year-earlier period and equal to the analyst consensus. Its net was 11.1 trillion won, up 15.2 percent on year and also in line with estimates.
The sales figure was 200 billion won higher than in the preliminary result announced on July 7 and was the second highest quarterly reading ever and a record for a second quarter.
The results bring an end to an extraordinary winning streak over three quarters, with the company posting record sales from the third quarter of 2021 to the first quarter of this year.
Strong performance in semiconductors cushioned the weakness in smartphones and home appliances as consumer demand flags in those areas.
Semiconductors generated 9.98 trillion won of operating profit, up 3.05 trillion won on year, as demand remained strong for chips used in servers. Of the company's overall operating profit, 70.8 percent came from this business. Semiconductor sales were up 25.3 percent on year to 28.5 trillion won.
It was the only category in which operating profit increased on year.
Operating profit in the consumer electronics business, which includes home appliances, sank 66 percent on year to 360 billion won. The figure marks the lowest since the second quarter in 2017 when a steep increase in television panel prices eroded profitability.
Smartphone operating profit fell 19 percent to 2.62 trillion won, but sales rose by 29 percent to 29.34 trillion won.
Operating profit in the panel making business was 1.06 trillion, down 17 percent on year. Sales increased by 12 percent on year to 7.71 trillion won.
On quarter, sales dropped 1 percent for the company and were down 9 percent in the smartphone business and 4 percent in the consumer electronics business. Sales in the panel category declined 3 percent.
The electronics maker expects more weakness in the second half since a visible slowdown in demand started taking shape in June.
Han Jin-man, executive vice president from the semiconductor business, said that the company could review some investments in chip facilities in the face of economic uncertainties.
"We've seen a wide range of macroeconomic issues recently," Han said during a conference call. "We need to reconsider the short-term investment plans in facilities in response to the environment."
Samsung Electronics is only the latest tech player warning of a possible adjustment in investment, following record-high expenditures on chip manufacturing facilities in recent years.
The company rejected press reports that Samsung may stop selling Exynos processors.
"It's simply not true," Kim Sung-koo, vice president at the Mobile eXperience division.
BY PARK EUN-JEE [firstname.lastname@example.org]