Samsung's Operating Profits Soar on Chip Demand

  • By Kim Seong-min

    July 31, 2020 13:03

    Samsung on Thursday reported better-than-expected earnings that suggest it benefited from the coronavirus epidemic.

    Second-quarter sales declined 5.6 percent on-year to W53 trillion but operating profit surged 23.5 percent to W8.15 trillion (US$1=W1,196). The operating margin stood at 15.4 percent, the highest since the fourth quarter of 2018. First-half sales totaled W108.3 trillion, flat on-year, but operating profit rose 13.8 percent to W14.6 trillion.

    The main driver of the strong profits was computer chips. The semiconductor division achieved an operating profit of W5.43 trillion, up 60 percent on-year and accounting for 67 percent of company-wide operating profit in the second quarter.

    Demand for chips soared due to telecommuting and online classes amid the coronavirus epidemic.

    The smartphone and home appliance businesses also achieved better-than-expected earnings. The smartphone division's operating profit surged 25 percent on-year to W1.95 trillion. The epidemic caused global smartphone sales to plummet and Samsung sold only 57 million around the world, down 25 percent on-year. But decreased marketing costs led to an increase in operating profit.

    In home appliances, operating profit stayed flat at W730 billion as consumers bought more household appliances from May with their emergency government handouts.

    The outlook for the second half of this year is also good, but uncertainties continue due to the protracted pandemic, U.S.-China trade wars and changes in global semiconductor market trends. 

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