Samsung Electronics has reported droopy results for its second quarter and has been beaten out by Huawei in the global handset shipments stakes for the first time.
As usual, the company’s chip and memory business held strong thanks to solid demand from data centres and OEMs as large swathes of the globe rushed to work and study from home. Memory profits were helped along by increased demand from data centres and operators migrating to 5th gen V-NAND.
Mobile device sales dropped again due to the extension of lockdowns in the company’s big markets, such as India, where users rushed to buy low-and mid-tier phones, dampening demand for Samsung’s products. The company expects sales to pick up in the third quarter with the launch of new devices.
The postponement of big sporting events such as the Tokyo Olympics and the Euro 2021 football tournament meant punters didn’t rush out to buy new TVs and hurt Sammy’s display business.
Overall, the company brought in $44.3bn in sales, down six per cent year on year. Operating profits jumped 23 per cent to $6.8bn largely thanks to chip and memory sales.
The company is cautiously optimistic about the rest of 2020, predicting its mobile and consumer electronics businesses to recover while also warning that “risks remain due to persisting uncertainties from COVID-19 and growing competition.”
The company expects stay-at-home workers to keep demand for server memory high. The imminent launches of the PlayStation 5 and Xbox Series X were also predicted to boost memory sales.
The company sees PC sales slowing as companies increase their spending on cloud solutions. It expects low-end laptops used by students studying at home to remain strong, however.
The results come as analyst firm Canalys said Huawei has for the first time topped Samsung’s mobile device market share globally. New research says a 30 per cent drop in Samsung’s Q2 handset shipments to 53.7m compared to a year ago was the culprit. Huawei also dropped, but only by five per cent, to 55.8m devices.
“This is a remarkable result that few people would have predicted a year ago,” said Canalys senior analyst Ben Stanton. “If it wasn’t for COVID-19, it wouldn’t have happened. Huawei has taken full advantage of the Chinese economic recovery to reignite its smartphone business. Samsung…has seen its core markets, such as Brazil, India, the United States and Europe, ravaged by outbreaks and subsequent lockdowns.” ®