SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) mentioned weakness within the international smartphone market would gradual earnings progress, as it reported document quarterly revenue on Thursday due to robust demand for semiconductors utilized in servers.
The world’s largest maker of reminiscence chips, smartphones and tv units additionally flagged softer demand for smartphone OLED panels as a problem for the second quarter, whereas its cash-cow chip enterprise ought to stay robust.
“Generating overall earnings growth across the company will be a challenge due to weakness in the display panel segment and a decline in profitability in the mobile business amid rising competition in the high-end segment,” the South Korean large mentioned in an announcement.
Samsung Electronics shares had been up 2.7 % as of 0412 GMT, whereas the KOSPI benchmark share value index .KS11 was 1.three % greater, as buyers shrugged off issues in regards to the smartphone market and seized on the outlook for reminiscence chips.
“Shares are rising as Samsung Electronics’ outlook for its memory chip business appears more positive than we’ve heard from other companies,” mentioned Greg Roh, analyst at HMC Investment & Securities.
South Korean rival SK Hynix Inc (000660.KS) and Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) individually warned this month of slower progress in smartphone chip gross sales. TSMC, a key provider for Apple Inc’s (AAPL.O) iPhones, reduce its income goal final week.
But Samsung Electronics, a rival and provider to Apple, forecast persevering with robust gross sales not solely of server chips however mobile chips as properly.
Sewon Chun, senior vp at Samsung’s reminiscence enterprise, mentioned the development towards “high-density” chips with extra processing power and larger storage capability would underpin demand for mobile DRAM and NAND chips this yr.
This was being pushed by new functions such as high-performance gaming, he advised an earnings name.
Samsung Electronics mentioned working revenue was 15.6 trillion received ($14.four billion) within the first quarter, up 58 % from a yr in the past and in keeping with the 15.6 trillion received the corporate had estimated. Revenue jumped 19.eight % to 60.6 trillion received, additionally in keeping with its estimate.
The chip enterprise was Samsung’s high earner once more as it booked a document 11.6 trillion received working revenue in January-March, from 10.9 trillion received within the earlier quarter, regardless of indicators the current increase in reminiscence chips was really fizzling out.
Samsung hinted at additional potential upside after the United States banned U.S. companies from doing enterprise with Chinese mobile telephone and telecommunications gear maker ZTE Corp (000063.SZ) (0763.HK).
ZTE could be compelled to look elsewhere for mobile chips if high provider Qualcomm Inc (QCOM.O) is locked out by the U.S. ban.
Ben Hur, vp of Samsung’s System LSI enterprise, which competes with Qualcomm, mentioned Samsung would “actively respond” to new purchasers when he was requested by analysts if the ban would assist Samsung’s chip gross sales in China.
Samsung mentioned its mobile enterprise booked three.eight trillion received in quarterly revenue, up 82 % from a yr in the past. Its flagship Galaxy S9 smartphone hit the market in mid-March.
According to market analysis agency GfK, international smartphone demand fell two % to 347 million models within the first quarter of 2018. Demand was particularly sluggish in China and North America, it mentioned.
However, the common gross sales value grew 21 % year-on-year within the quarter, resulting in an 18 % rise in international smartphone income to $129.eight billion.
($1 = 1,081.2000 received)
Reporting by Joyce Lee; Editing by Stephen Coates