Samsung Electronics shares rose more than 3% on Thursday, a day after the electronics giant posted its best April-June quarterly profit in three years.
The 11% rise in earnings was attributed to demand for memory chips from server customers, which offset inflation-hit smartphone sales.
Revenue rose 21% from the same period a year earlier to 77 trillion won ($59 billion), Samsung said in a short preliminary earnings release, in line with market expectations.
Its second-quarter operating profit rose to 14 trillion won from 12.57 trillion won a year earlier. That was only slightly shy of a 14.45 trillion won SmartEstimate from Refinitiv.
Samsung is due to release detailed earnings this month.
Looming Chip Glut
Samsung’s chip profits were shielded last quarter from what analysts think is a looming glut of customers after high demand over the past two years, as large US tech firms that use a lot of data centre services kept buying chips to meet cloud demand.
But prices of specific DRAM chips, used in tech devices and servers, fell about 12% last month from a year ago, according to data provider TrendForce, and analysts expect prices to continue to fall as demand weakens for smartphones and laptops.
“Server DRAM has become the only effective sales outlet … Therefore, Korean manufacturers were the first to signal a willingness to discuss a quarterly pricing reduction of more than 5% (for server DRAMS),” TrendForce said.
Prices of NAND Flash chips, used for data storage in tech devices, are also projected to fall as much as 5% in the July-September period from the previous quarter, TrendForce said.
- Reuters, with additional editing by George Russell