Samsung enjoys 11% growth due to continuing chip demand
Samsung is returning to pre-pandemic revenue levels: it showed its best Q2 profits since 2018. The reason is claimed to be the solid memory chip demand, even though the demand created by the smartphone makers experiencing inflation-related problems decreases.
Samsung’s share prices grew 2.5% on the Q2 news, when Samsung revealed an
Shares of the world's largest memory-chip and smartphone maker rose 2.5 percent after preliminary results for the second quarter were announced, versus a 1.5 percent rise in the wider market.
Samsung posted an operating profit of roughly $10.8 billion, up 11% year on year. Revenue was reportedly up 21%.
Other chip manufacturers have predicted waning demand, and, in fact, the rising inflation is decreasing spending. DRAM chip prices that are used in devices and servers dropped approximately 12% year-on-year, NAND Flash chips are expected to fall about 5% in Q3 compared to Q2.
Lowered smartphone demand
Growing inflation, a potential market downturn, China’s Covid-19 lockdowns, and the war in Ukraine have resulted in decreasing smartphone sales, so server chip demand is the only thing that may save the day.
Major US companies like Amazon, Meta, Google, and Microsoft are purchasing chips so as to meet the demand for cloud services. Foxconn, a major player in this niche, also confirmed its optimistic Q4 and full-year forecasts. In addition, the strengthening dollar, which is at a 20-year high, contributed to Samsung's Q2 chip profits.
Samsung's chips are mainly sold for dollars, but its profit is reported in Korean won, so the same revenue translates into higher earnings due to inflation.
74 million smartphones were shipped by the company in Q1 2022.