Even in a rough economy, Samsung Electronics is about to report its best Q2 performance in four years on the back of strong semiconductor sales.
A quarterly survey of Korean analysts by Korea's Yonhap Infomax is tipping a 14.5 trillion won (US$11.1 billion) operating profit, up 15.6% from last year, with revenue forecast to rise 20.6%.
The leap in sales reflects a surge in demand for memory chips for servers and data centers, more than offsetting weaker results in Samsung's handset and other divisions.
The implicit good news there for telcos is the continuing growth in cloud and data center, underpinned by 5G and digital services demand and the wider post-lockdown rebound.
Yet while big chip firms are useful bellwethers, the semiconductor industry is being pulled in multiple directions.
Intel and AMD are warning of a tighter outlook because of the downturn in PC sales, The Wall Street Journal reports. Nvidia is dealing with the slump in crypto, a segment that had been heavily buying its gear for currency mining, and the post-lockdown fall in video game sales.
Memory supplier Micron issued a profit warning last week over lower PC and handset demand and a looming inventory glut, wiping 10% off its stock price.
It wasn't that long ago that chip foundries were running at capacity to meet booming demand (see China exempts key factories to avert supply chain crisis).
Today, besides the server and data center markets, the auto industry is still fueling semiconductor demand, but the consumer sectors are contracting thanks to inflation and weakening consumer sentiment.
Taiwan research firm Trend Force says DRAM prices fell 3-8% in Q2 and warns Q3 prices could dive more than 10% if suppliers start slashing prices to clear inventory.
For telcos the most disconcerting indicator is the slide in smartphone sales – but it's not all gloom.
Counterpoint Research said in a research note last week that while supply chain bottlenecks had been stabilizing earlier this year, the market has now been hit by "multiple factors including inflation, China's slowdown, and the Ukraine crisis."
However, it expects sales to improve in the second half thanks to "a more normalized situation in China, continued improvement in the supply-demand balance in tech supply chains, and a better macroeconomic landscape" if inflation starts tracking downwards.
Counterpoint added that notable launches like the new Samsung Galaxy Fold and the iPhone 14 would also likely ignite demand, as well as events like China's 618 festival, back-to-school in August and India's Diwali.
- China exempts key factories to avert supply chain crisis
- China's chip sector flounders, Samsung off to a flier
- Yes, China's tech sector really is slowing while telcos surge
— Robert Clark, contributing editor, special to Light Reading