Consumer, memory woes hit Samsung
Samsung Electronics has seen a drop in its Q2 revenue from the weakness of the the memory business as plans for 2nm devices progress.
Quarterly revenue was KRW 60.01 trillion ($46.8bn) for Q2, down 6% on the previous quarter, with operating profit up slightly at KRW 0.67 trillion ($523m).
It expects global IT demand and business environment to recover gradually in 2H but macroeconomic risks still remain it says. Global demand is expected to gradually recover in the second half of the year which should lead to an improvement in earnings driven by the component business
The Memory Business saw results improve from the previous quarter as its focus on High Bandwidth Memory (HBM) and DDR5 products in anticipation of robust demand for AI applications led to higher-than-guided DRAM shipments. It plans to focus on sales of high-value-added products such as DDR5, LPDDR5x and HBM amid expectations of that recovery in demand.
It will continue to strengthen mid- to long-term competitiveness by increasing investments in infrastructure, R&D and packaging technology
However system semiconductors posted a decline in profit due to lower utilization rates on weak demand from major applications.
System LSI
The System LSI Business posted a lower-than-expected improvement in its earnings due to the delayed recovery of demand for semiconductors and customers’ continued inventory adjustments.
However, the System LSI Business won a design award for automotive SoCs with a domestic OEM for their 2025 premium model, and it also continued efforts to expand SoC applications including actively discussing mid- to long-term cooperation with European customers.
The System LSI Business also expanded its applications to fingerprint authentication cards in the security business as well as Battery Management Systems (BMS) in the power management IC (PMIC) business.
The company spent KRW 14.5 trillion ($11.5bn) in the quarter, including KRW 13.5 trillion for semiconductors and KRW 0.6 trillion for displays. Spending on memory was concentrated on completing the P3 infrastructure and the P4 framework for mid- to long-term supply.
Samsung foundry
Foundry investments continued to focus on fabs in Taylor, Texas and Pyeongtaek, Korea to address the demand for advanced nodes, while investments in displays focused on infrastructure and module production enhancements.
The Foundry Business saw its revenue increase quarter-on-quarter in the second quarter thanks to increased sales to some US customers, but operating profit declined significantly as utilization decreased due to fab expansion and uncertainties in short-term demand.
The Foundry Business is producing its third product using GAA technology and developing the second generation of 3nm GAA technology with 2nm GAA technology is on track and progressing well.
Display panels
In the mobile panel business, earnings were similar to the previous quarter on the back of solid sales of premium panels, while the large panel business continued to focus on QD-OLEDs in the premium market.
The Device eXperience (DX) Division achieved strong profitability due to higher sales of premium TVs and digital appliances, an improved cost structure and increased operational efficiency. The Networks Business’s revenue declined in major overseas markets including North America and Japan.
Harman posted revenue and profit growth, led by demand for consumer audio such as portable and True Wireless Stereo products. Harman also won the largest automotive order in its history in the quarter.
The Networks Business aims to win new projects to grow revenue and reinforce technology leadership in 5G core chips and software-based virtualized Radio Access Networks (vRAN).
The Memory Business achieved its bit growth guidance even as it saw more limited price drops for both DRAM and NAND, which ultimately contributed to a quarter-on-quarter improvement in performance. The strong demand for generative AI saw investment from the data centre sector concentrated on AI servers.
For DRAM, the Memory Business exceeded bit growth guidance by expanding sales on applications of consumer, graphics and automotive in addition to expanding sales focusing on servers, especially by actively responding to rising demand for DDR5 and HBM for generative AI applications.
As for NAND, the Memory Business actively responded to the demand for flagship smartphones with competitiveness in UFS 4.0 and also achieved bit growth guidance by increasing sales of gaming devices, branded products for retail and so on. Meanwhile, the price decline was considerably less than the previous quarter.
In the second half of 2023, the recovery of demand for major applications such as mobile is likely to be delayed due to depressed consumer sentiment and lower-than-expected reopening efforts in China.
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