"No Problem with Semiconductor Uptrend"… Samsung and SK Hynix 2Q Earnings 'Clear'

Samsung Electronics Likely Led by Semiconductor in 2Q Company-Wide Earnings
SK Hynix Expected to Double Operating Profit QoQ
DRAM Spot Prices Up 35% Over Four Months Since Early This Year
DRAM Prices Forecasted to Rise 3-8% in 3Q

[Asia Economy Reporter Suyeon Woo] As memory semiconductor prices continue to rise globally, expectations for strong second-quarter earnings from Samsung Electronics and SK Hynix are increasing. While some voices express concerns about a slowdown in DRAM price increases starting in the second half of the year, experts generally agree that the overall upward trend remains largely unaffected.

According to FnGuide on the 30th, the consensus for Samsung Electronics' second-quarter earnings this year is projected at KRW 61.26 trillion in sales and KRW 10.8 trillion in operating profit. These figures represent increases of 15% and 33%, respectively, compared to the same period last year. Samsung Electronics' operating profit, which recorded the KRW 9 trillion range in the previous quarter, is expected to reach the KRW 11 trillion range in the second quarter, driven by growth in the semiconductor sector. Samsung Electronics' preliminary second-quarter results will be announced on the 7th of next month.

By segment, the semiconductor division is expected to lead overall performance. The semiconductor division's operating profit, which was temporarily sluggish at KRW 3.4 trillion in the first quarter due to the shutdown of the Austin foundry plant in the U.S., is expected to nearly double to the high KRW 6 trillion range in the second quarter.

SK Hynix, which has a high proportion of memory semiconductor business, is expected to see even more dramatic growth. The second-quarter consensus forecasts sales of KRW 9.79 trillion, a 13% increase year-on-year, and operating profit of KRW 2.69 trillion, up 38%. SK Hynix's quarterly operating profit has been on a downward trend since it peaked at KRW 6 trillion in the third quarter of 2018, linked to DRAM prices.

This improvement in profitability in the semiconductor industry is thanks to the sharply rising DRAM prices recently. The spot price of DRAM (based on DDR4 8Gb 2400Mbps) hovered around $3.4 at the beginning of this year, surged to $4.5 in mid-March, and climbed further to $4.6 by the end of April. This represents an increase of about 35% in just over four months.

However, recently, the price increase has paused as the market takes a breather after the sharp rise. The industry expects DRAM prices to enter another upward phase starting in the third quarter. According to DRAMeXchange, DRAM prices are expected to rise 3-8% quarter-on-quarter in the third quarter. Price increases are anticipated mainly for data center server DRAM and mobile DRAM from the third quarter, and global foundry supply shortages are also expected to lead to price hikes in new foundry contracts.

Dongwon Kim, a researcher at KB Securities, said, "Although concerns about semiconductor price declines in the second half remain, corporate demand in the server and PC sectors is increasing significantly after vaccinations. Memory inventory is also at a normal level, so the upward trend in memory semiconductor prices is expected to continue through the third and fourth quarters."

Accordingly, securities firms' outlooks for Samsung Electronics and SK Hynix's third-quarter earnings are brighter than for the second quarter. Samsung Electronics is expected to record operating profits in the KRW 14 trillion range in the third quarter, with the semiconductor division alone posting KRW 8-9 trillion. SK Hynix is expected to recover operating profits to the KRW 4 trillion range.

This content was produced with the assistance of AI translation services.