Samsung Electronics Reports Profit Increase of 12 Percent in Q2 | Technology

The South Korean tech giant reports record quarterly profit for key semiconductor business.

South Korean chip powerhouse Samsung Electronics has reported a 12.18 percent increase in operating profit for the second quarter, with record profits in its semiconductor division despite global supply chain problems.

The company’s “systems semiconductor business … posted record quarterly profits,” Samsung said in a statement Thursday, adding that it had both expanded its product range and expanded its chip offerings to global customers.

“Profit in the Memory Business improved both year-over-year and quarter-over-quarter as the company focused on meeting solid demand for servers,” Samsung said.

In June, the company became the world’s first chipmaker to mass-produce 3-nanometer microchips, while trying to match and eventually surpass Taiwan’s TSMC in the race to produce the world’s most advanced chips.

The new chips will be smaller, more powerful and more efficient and will be used in high-performance computing applications before being incorporated into gadgets such as mobile phones.

The vast majority of the world’s most advanced microchips are made by just two companies—Samsung and TSMC—both running at full capacity to fill a global shortfall.

Samsung is the market leader in memory chips, but is struggling to catch up with TSMC in its advanced foundry division, which makes high-tech microchips for other companies.

‘Geopolitical issues’

Samsung, which is also a global leader in handset manufacturing, said demand for and profit from its smartphone division was lower than in the first quarter.

“Total market demand fell from the previous quarter amid geopolitical concerns and inflation concerns, on top of continued weak seasonality,” the report said.

“Profitability has declined to some extent from the previous quarter due to rising component and logistics costs, as well as negative effects from currency movements,” it added.

But overall, the weakness of the Korean won against the US dollar benefited the company, it said in the statement, “resulting in company-wide profits of about 1.3 trillion won ($994 million) compared to the previous quarter”.

The supply of memory chips has recently gained geopolitical importance around the world, with leading governments scrambling to secure advanced chip inventories.

This was demonstrated in May when US President Joe Biden kicked off a tour of South Korea with a visit to Samsung’s sprawling Pyeongtaek chip factory.

Russia’s invasion of Ukraine has “further highlighted the need to secure our critical supply chains,” Biden said at the plant, underlining the importance of strengthening technology partnerships between “close partners who share our values.”

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