SEOUL, July 28 (Reuters) – Samsung Electronics Co Ltd (005930.KS) It warned that chip demand from smartphone and PC makers would weaken additional as individuals purchase much less, and extra resilient demand from server prospects may additionally see changes amid recession issues.

Whereas the world’s main smartphone and reminiscence chip maker posted its finest April-June working revenue since 2018 on robust demand for server chips, it stated its cell enterprise noticed weakening earnings amid geopolitical woes. , inflation issues, and better part and logistics prices. learn extra

“Server (chip demand) is much less affected by macro points… But when a world recession happens, server prospects may even have to regulate their stock,” Jin-man Han, govt vp of the Samsung’s reminiscence chip enterprise. to name.

“As a result of excessive uncertainty, we’re continually updating our forecast,” he added.

Previously Qualcomm Inc, based mostly in San Diego (QCOM.O) warned of a success to fourth-quarter gross sales from cooling smartphone demand, including to the refrain of voices warning of chip gross sales as red-hot inflation curbs client spending.

As well as, the Ukraine disaster and COVID-19 lockdowns in China, the world’s largest smartphone market, have worsened provide chain hurdles, forcing many phonemakers to chop chip orders. .

Samsung will reply to the uncertainty with a “versatile” deployment of short-term capital expenditures and a disciplined provide of chips to match demand, Han stated with out elaborating.

An analyst at Cape Funding & Securities, Park Sung-soon, stated he expects “capex cuts by Samsung and SK Hynix subsequent yr within the reminiscence chip enterprise.”

Samsung, nonetheless, was comparatively optimistic about smartphone demand within the second half, saying the corporate’s provide disruptions had principally been resolved and demand would stay flat and even see development of only one. digit.

Its objective is for foldable cellphone gross sales to overhaul these of its earlier flagship smartphone, the Galaxy Word, within the second half. It’s anticipated to current its newest brochures on August 10.

BEST Q2 PROFIT SINCE 2018

Samsung’s working revenue rose to 14.1 trillion gained ($10.8 billion) for the quarter ended June 30 from 12.57 trillion gained a yr earlier, its highest second-quarter revenue since 2018. and likewise barely greater than his personal estimate of 14 trillion gained.

The revenue included chip revenue of 9.98 trillion gained and cell enterprise revenue of two.62 trillion gained.

“Elementary demand for servers (reminiscence chips) will stay robust as investments in core infrastructure and new development areas akin to AI and 5G are anticipated to proceed to develop, specializing in main information middle corporations,” Samsung stated.

TSMC (2330.TW), the world’s largest contract chipmaker, earlier this month additionally touted demand for its high-tech chips utilized in information facilities. learn extra

Nevertheless, smaller rival SK Hynix 000660.KS stated on Wednesday that demand for server reminiscence chips is prone to decline within the second half as information middle prospects deplete their stock as they put together to the recession learn extra

Samsung’s April-June income rose 21% to 77.2 trillion gained.

A robust greenback additionally helped Samsung’s chip income, boosting its working revenue by about 1.3 trillion gained in comparison with the earlier quarter, the corporate stated.

Samsung’s chip gross sales are principally in {dollars}, whereas it studies earnings in Korean gained, so a agency greenback interprets to larger chip earnings.

Shares of the corporate rose 0.7% in afternoon buying and selling, versus a 1% rise within the broader market. (.KS11) and a 0.3% drop in shares of reminiscence chip rival SK Hynix.

Reporting by Joyce Lee and Heekyong Yang; Edited by Himani Sarkar

Our requirements: The Thomson Reuters Belief Ideas.