Samsung Electronics has ridden the chip shortage to deliver boost earnings and revenue despite a fall in handset sales. The heavy demand and higher prices for its memory chips propelled the Korean giant past analysts' estimates to post Q2 earnings of 9.63 trillion won ($8.41 billion), up 73% over the same period a year ago. It achieved 20% higher revenue of 63.7 trillion won and boosted operating profit by 54% to 12.6 trillion won.

Bit of both

As both a major producer and consumer of semiconductors, Samsung makes an interesting study. Its semiconductor unit, dominated by memory chips, improved operating profit by 28% and sales by 25%, contributing more than a third of total revenue and more than half of the profit for the quarter. This performance, combined with higher smart TV shipments and the return to full capacity at its Austin chip fab, overcame the lower smartphone sales.

The mobile unit, despite an improvement over the pandemic-affected period a year ago, was down 24% sequentially to 21.4 trillion won because of component shortages and the Covid-19 shutdown of its Vietnam factory, the company said.

The company did not break out numbers for its networks unit, which is enjoying one of its best growth periods ever after winning important 5G contracts with Verizon, KDDI and NTT DoCoMo. But Sung Koo Kim, vice president for mobile communications, told an earnings call Thursday network sales had risen quarter-on-quarter thanks to North American demand and 5G expansion in Korea.

In the second half of the year it would target additional sales in North America and Japan, he said.

All in hand

For the handset business, he expected the market to recover to 2019 levels. "However uncertainties regarding component supply and Cover-19 are likely to linger," he said. Samsung's focus would be on new affordable smartphones and boost competitiveness of its foldable phones, he said.

Jin Man Han, executive vice president of the semiconductor business, acknowledged escalating geopolitical issues but said he expected "the fundamentals of market demand" to remain.

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The company forecast robust demand for chips to support new 5G phones and strong server and enterprise PC demand, he said.

Samsung's memory chip-powered profit and outlook follows on from strong recent results from other industry leaders such as TSMC and Qualcomm as the global economy grapples with shortages.

World Semiconductor Trade Statistics has forecast a 19.7% increase in chip sales in 2021.

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— Robert Clark, contributing editor, special to Light Reading