Samsung posts highest profit in 3 years from server and PC memory demand

Samsung's chip business contributed over half of the profit during the quarter thanks to strong demand for memory chips.

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Image: Corinne Reichert/ZDNet

Samsung recorded its best operating profit in nearly three years during the second quarter of 2021 thanks to high demand for memory chips during the quarter.

The South Korean tech giant said on Thursday that it posted 63.67 trillion won in sales and 12.57 trillion won in operating income.

Sales and operating income jumped 20% and 54%, respectively, from the previous year. It is Samsung's best quarterly performance since the third quarter of 2018.

The company's semiconductor business contributed 6.93 trillion won in operating income, over half the total figure.

Market conditions improved in the memory market, which led to stronger-than-expected increase in average sales prices for both DRAM and NAND chips, Samsung said.

According to Samsung, DRAM saw high demand from data centre and PC sectors. High demand for memory from server, data centre, and PC sectors is expected to be sustained throughout the remainder of the year, the company said.

Besides memory, its logic and foundry operations also saw earnings improve, thanks to the full normalisation of its Austin fab that eased supply constraints, Samsung said.

The tech giant's mobile business was the second-largest contributor to operating income, pitching in 3.24 trillion won.

Samsung stressed that the business secured solid double digit operating profit margin despite the global component supply shortage through rebalancing supply and improving cost control.

The business will "strive to achieve" solid sales and operating income in the second half of the year with the launch of new foldable models, expansion of mass market 5G phones and sales of Galaxy ecosystem products, the company said.

Samsung's display panel business also reported a "one-time gain" and increase in panel prices that helped it contribute a surprise 1.28 trillion won.

Though Samsung didn't explain the nature of the gain, it is likely referring to the penalty paid by Apple, its customer for mobile OLED panels, which it is required to pay when it fails to meet the minimum order quantity.

The display unit said it plans to introduce new technologies such as under panel camera. Though the company made no direct reference, the feature is likely to be on the upcoming foldable phones.

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