Samsung Electronics Co. 4 Dual Data Rate (DDR) 8GB memory modules are set up for a photo in Seoul, South Korea, Tuesday, July 9, 2019.
SeongJoon Cho | Bloomberg | fake pictures
Samsung shares fluctuated on Tuesday morning after the tech giant released a earnings guide for the three months ending in June.
Operating profit probably increased nearly 23% to 8.1 trillion Korean won (about $ 6.8 billion) from a year earlier, beating the 6.4 trillion won that analysts predicted through Refinitiv SmartEstimate. Consolidated sales probably fell more than 7% yoy to 52 trillion won, Samsung said.
The company did not provide a breakdown of the performance of each unit in Tuesday’s guide, but it marked a one-time gain in the display business, which regards Apple as a customer. Increased demand for memory chips is likely to have offset some of the declines seen elsewhere in the business.
The shares initially rose more than 1% before erasing gains to drop 1.27% at 9:08 am HK / SIN.
Samsung’s second-quarter results were “very strong,” driven by strength in its smartphone and consumer electronics businesses, as well as expected strength in the memory unit, said Sanjeev Rana, senior analyst at CLSA. , on “Squawk Box Asia of CNBC”. ”
The memory components used in data centers and smartphones are Samsung’s main for-profit business.
Rana said he expected another strong quarter for the South Korean tech giant in the three months ending September, driven by higher overall memory-related gains and a recovery in smartphone shipments in the second half of the year. Samsung’s display unit is likely to benefit from supplying parts to Apple for the iPhone 12 as well.
Still, he warned of a slight short-term weakness in the memory market.
“In the second half, we expect a slight correction,” said Rana, referring to the average selling price of memory chips. She explained that the correction will be temporary, with a duration of two quarters maximum. There may also be some weakness on the demand side in the short term, but Rana said he expects a recovery in 2021.
Analysts have previously said that the demand for memory chips was fueled by the coronavirus pandemic, which forced millions to work from home and shop online.
Samsung’s full earnings numbers are due at the end of this month.
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