Samsung on Thursday announced second quarter earnings guidance that analysts said was “better than feared,” putting investors at ease about not only the South Korean tech giant but other chipmakers as well — reports CNBC.
The company expects to report revenue of 77.78 trillion Korean won ($59.8 billion USD) for Q2, up 22% year-over-year. Samsung expects its operating profit for the quarter to increase 12% year-over-year to 14.12 trillion Korean won. While Samsung’s quarterly revenue is in line with analyst estimates, its operating profit fell behind.
Even so, Daiwa Capital Markets analyst SK Kim told CNBC that the results were “better than feared.” Samsung recorded its highest annual revenue ever last year, and both the company and analysts were hoping for that explosive growth to continue.
Unfortunately, the chipmaking industry has been rattled by supply chain disruptions, geopolitical uncertainties in Europe stemming from Russia’s invasion of Ukraine, and inflationary pressure on the cost of raw materials since the start of the year.
Strong sales of memory chips for servers to enterprise customers helped Samsung get its best Q2 profit since 2018.
To top it all off, demand for consumer electronics, which Samsung makes chips and other components for, is slowing as a result of unprecedented global inflation. Samsung’s chipmaking business typically makes up almost 60% of its total operating profit.
Samsung’s and other chipmakers’ stocks have also taken a tumble in recent weeks as part of a wider market selloff of tech stocks.
Thursday’s earnings guidance sent Samsung shares up 3%, and the announcement also helped other Asian semiconductor stocks rally. Apple supplier Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, saw its shares rise 5%. United Microelectronics Corporation went and SK Hynix also rose more than 7% and nearly 2%, respectively.
Samsung will release a detailed breakdown of its Q2 financial results later this month.
