Thanks for the memory: Add Samsung to the list of tech giants raking it in despite supply concerns
Turns out that Austin factory shutdown was nothing but a blip
Samsung Electronics is flying high on the back of a surge in memory prices and demand expected to remain strong for the rest of 2021.
The South Korean tech monster reported record-breaking group revenue of ₩63.67trn ($55.5bn) for Q2 2021, up by a fifth year-on-year, as most business units surpassed the best estimates of senior management.
The chaebol also recorded [PDF] a 54 per cent leap in operating profit of ₩12.57trn, with more than half of this attributed to its semiconductor business.
Device Solutions (DS), the largest division at Samsung, generated an 18 per cent rise in revenue to ₩29.47trn. Its semiconductor components, including memory, foundry and System LSI, turned over ₩22.74trn in sales, up 25 per cent and ₩6.93trn in operating profit, up 27 per cent.
This signals that operations were quick to stabilize following the unplanned shutdown of Samsung's Austin foundry fab in February.
Samsung said in a canned statement: "The semiconductor business saw a significant improvement in earnings as memory shipments exceeded previous guidance and price increases were higher than expected, while the company strengthened its cost competitiveness."
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The Display business, also housed in DS, grew two per cent to ₩6.87trn, reporting a profit from operations of ₩1.28trn, up more than threefold on the corresponding quarter a year earlier.
The IT and Mobile Communications division grew nine per cent to ₩22.67trn, and within that operation the Mobile sub-division was up eight per cent to ₩21.43.
Samsung said it maintained profitability in its mobile communications business thanks to cost-cutting measures and a thriving wearable and tablet market.
The Korean multinational expects high demand in particular for mobile and data-center memory parts for the rest of the year due to 5G adoption and sustained server and PC demand. However, Samsung said this could be complicated by supply disruptions, COVID-19 factors, and geopolitical tensions.
Samsung Electronics said it plans to focus on "premium category leadership" in mobile to stay profitable. New foldables are due to show up in August.
Samsung's Consumer Electronics business was up 32 per cent to ₩13.4trn, and its audio gear maker Harman grew 57 per cent to ₩2.42trn.
While the financials paint a rosy picture overall, smartphone sales dropped by 22 per cent from Q1 to Q2. Samsung chalked the plunge to industry component supply shortages and production disruptions in Vietnam.
Though the results are collectively strong, shares fell anyway, seeing a two per cent dip this year. ®