South Korea’s Samsung Electronics Co Ltd expects higher first-quarter profits, it said on Tuesday, as millions of people working from home in coronavirus lockdowns turn to cloud data services, pushing up demand for its chips.
The pandemic is wreaking havoc across the global economy – Samsung itself had operations suspended at 11 overseas assembly lines as of Tuesday – and is widely expected to cause a recession.
But changing behaviour patterns among the vast numbers of people forced to stay at home around the world have generated a silver lining for the world’s biggest smartphone and memory chip maker.
In the first three months, operating profits inched up 2.7 per cent from last year to around 6.4 trillion won ($5.2 billion), Samsung Electronics forecast in an earnings estimate.
The figure was ahead of expectations, and was based on sales of 55 trillion won, up five per cent year-on-year.
“There has been high demand for memory chips for data servers as an increasing number of people are now working from home due to the outbreak,” said Tom Kang, an analyst at Hong Kong-based market researcher Counterpoint.
“We are also seeing a hike in demand for laptops because we have many companies that are not fully ready for working digitally.”
Samsung Electronics is crucial to South Korea’s economic health.
It is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled conglomerates known as chaebols that dominate business in the world’s 12th-largest economy.
Samsung Electronics shares were trading up 1.7 per cent on Tuesday, having fallen nearly 20 per cent from a record high in January amid concerns over the coronavirus pandemic and its economic repercussions.