Samsung Electronics Posts Better Than Expected Profits In Q1 Despite Covid-19 Crisis

In the recently ended January to March quarter, Samsung Electronics realized a slight increase in its revenue debating expectations. The South Korean tech company in its preliminary quarter results released on Tuesday posted an operating profit of 6.4 trillion won ($5.2 billion), slightly up from a similar period last year.

The slight rise in profits was attributed to strong chip sales which helps cushion the company from the sales decline in its consumer electronics business due to the coronavirus pandemic.

Sales were also anticipated to be 55 trillion won, representing a 5 percent rise year on year. In Q1 the company has been vocal about expecting low revenue from its estimates, but one of its key cash cows, the memory chip business, has helped them obtain better-than-expected results.

The memory chip business has seen a growth in demand as more people remain homebound leading to increased online activity thus boosting demand for data centers.

The semiconductor business has seen a rise in both demand and prices of DRAM and flash memory used by cloud and data centers.

Samsung is also expecting to take a bigger hit on revenue in the second quarter. Although the company did not detail how each division performed, the company’s display, mobile, and consumer electronics business is majorly hit by the ongoing coronavirus crisis.

A recent report has shown the company’s Galaxy S20 flagship sales have been severely affected by the pandemic. If the pandemic continues further into Q2, the company’s revenue will be severely affected.

“…if the Covid-19 pandemic continues further, we can’t guarantee that the uptrend in expansion of servers will be sustainable in the second half of this year,” said Song Myung-sup, an analyst from HI Investment & Securities Co. in Seoul, speaking to Bloomberg.

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