Samsung Electronics expects Q2 earnings to surpass market forecasts

Strong demand for server chips prompted Samsung Electronics Co. to expect its operating profit in the second quarter to reach 8.1 trillion won, up 22.7 percent from 6.6 trillion won last year.

Sales of server chips are perceived as offsetting a dip in its smartphone sales.

Its estimate for the operating income in the second-quarter far surpasses the market consensus of 6.8 trillion won.

However, Samsung expects its second-quarter sales to drop by 7.3 percent from a year earlier to 52 trillion won, which is still slightly higher than the market forecast of 51.6 trillion won.

Samsung also expects its operating margin to reach 15.6 percent in the second quarter, the highest since the last quarter of 2018.

The company will reveal detailed earnings later this month, breaking down its respective business divisions' performances.

According to analysts, Samsung's semiconductor business elevated its overall performance in the second quarter as the stay-at-home economy drove demand for server chips from data centers.

Analysts forecast Samsung's chip business to have logged in an operating profit of around 5 trillion won in the second quarter, which is the highest since the 7.7 trillion won it collected in the fourth quarter of 2018.

Samsung's mobile business is seen as suffering a decline in earnings, and its consumer electronics business expecting a mediocre second-quarter performance.

However, analysts say that the signs of a recovery in demand last month as major economies reopened their markets should be taken into account.