Samsung's 2nd quarter chip sales unlikely made up for smartphone weakness

The world's biggest supplier of certain memory chips on Tuesday will announce preliminary April-June revenue as well as operating profit.

At Samsung Electronics Co Ltd, demand for its chips from data centres bulking up to meet a surge in work-from-home traffic was not likely enough to offset muted sales of its smartphones in the second quarter, analysts said.

The world's biggest supplier of DRAM and NAND memory chips on Tuesday will announce preliminary April-June revenue as well as operating profit, which it previously expected to show a decline.

Profit likely fell 4.5% to 6.3 trillion won ($5.25 billion) from the same period year earlier, according to Refinitiv SmartEstimate, which is weighted towards the more consistently accurate analysts.

Work-from-home orders and growth in online learning is underpinning chip demand amid the COVID-19 pandemic, prompting U.S. DRAM supplier Micron Technology Inc to forecast strong quarterly revenue last month.

Chips bring in roughly half of Samsung's profit. The rest is mainly smartphones, of which the South Korean firm is the world's largest maker.

"With improved demand, a spike in DRAM prices helped Samsung continue with a solid performance in the second quarter," said analyst Park Sung-soon at Cape Investment & Securities.

Those price increases were likely driven by data centres stockpiling chips and so are unlikely to continue, analysts said. Though DRAM prices jumped 14% in the quarter, they were flat in June versus May, showed data from DRAMeXchange.