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Korean tech giants to report improved earnings in Q2

Models promote a discount event for home appliances at a local department store. (Yonhap)
Models promote a discount event for home appliances at a local department store. (Yonhap)

The latest forecasts about Korean technology companies’ profits in the second quarter suggest they have at least avoided the worst-case scenario amid the protracting COVID-19 pandemic, due to the semiconductor industry’s outperformance, according to industry sources on Sunday.

The newest figures released by local stock brokerages show that Samsung Electronics is estimated to report around 53.6 trillion won ($44.5 billion) in sales and 6.4 trillion won in operating profit for the April to June period.

The forecasts were adjusted higher as the company is seeing improvements in profitability stemming from increased demand for memory chips and higher prices.

Of the operating profit estimate of 6.4 trillion won, Samsung’s semiconductor division would account for 5.4 trillion won in the second quarter, marking notable growth from 4 trillion won in the first quarter.

SK hynix, the world’s second-largest memory chip provider after Samsung, is also predicted to announce a larger profit in the second quarter, benefiting from increased memory prices.

Fixed prices of server and PC DRAM modules have soared around 20 percent and 14 percent, respectively, from prices in the first quarter, according to market tracker DRAMeXchange.

They account for more than half of SK hynix’s DRAM sales.

The SK semiconductor business’s second-quarter operating profit is expected to stand at 1.6 trillion won, up 160 percent from the same period last year.

However, Samsung’s consumer mobile and electronics units are highly likely to report declines in operating profits.

The smartphone business is projected to make about 1.5 trillion won in second-quarter operating profit due to slow sales of the Galaxy S20 series, while the consumer electronics unit is estimated to obtain around 500 billion won.

The electronics division suffered slumps in global sales, but enjoyed unsolicited gains in the domestic market as the stay-at-home trend led consumers to replace old home appliances with new ones.

The outlook for LG Electronics, whose main business pivots on TV and home appliances, is not so rosy, either.

The company is forecast to report about a 35 percent on-year fall in second-quarter operating profit, and about a 62 percent drop on-quarter.

By Song Su-hyun (song@heraldcorp.com)
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