SEOUL, April 29 (Xinhua) -- The first-quarter operating profit of Samsung Electronics, South Korea's tech behemoth, grew as the COVID-19 outbreak increased demand for IT products, the company said Wednesday.
Consolidated operating profit expanded 3.43 percent from a year earlier to 6.45 trillion won (5.3 billion U.S. dollars) in the January-March quarter.
Revenue gained 5.61 percent to 55.33 trillion won (45.4 billion U.S. dollars), but net income fell 3.15 percent to 4.88 trillion won (4 billion U.S. dollars).
The earnings beat market expectations of about 6 trillion won (4.9 billion U.S. dollars) for operating profit and 54.7 trillion won (44.9 billion U.S. dollars) for revenue.
The better-than-forecast earnings came as the coronavirus pandemic encouraged people to stay and work at home, shop online and attend online classes, leading to higher demand for semiconductors.
The semiconductor business recorded an operating profit of 3.99 trillion won (3.3 billion U.S. dollars) on revenue of 17.64 trillion won (14.5 billion U.S. dollars) in the March quarter.
The revenue advanced 21.9 percent from a year earlier, but the operating profit went down 3.2 percent on a yearly basis. From three months earlier, the operating profit was up 15.7 percent.
Demand for DRAM chips from datacenters was solid on the rising usage of streaming services and online shopping, while demand for DRAM chips used for PCs remained steady on the back of the increased virtual meetings.
Mobile demand for NAND flash memory chips was robust on the expanded products adopting high-density storage, while demand for server solid state drive (SSD), mainly from datacenters, continued to grow alongside rising demand for high-volume content.
Samsung forecast that demand for DRAM memory chips would be firm in the second quarter due to robust growth in server demand, caused by the rapid expansion in remote working, online education and streaming services.
The NAND flash memory market was expected to stabilize in the second quarter as the impact from lower demand for smartphones is to be offset by growing SSD demand from datacenters.
Earnings for the system LSI business increased in the first quarter on higher demand for 5G mobile processors and high-resolution image sensors for smartphones, but it was forecast to contract in the second quarter owing to the fading effects of the flagship smartphone launches and weak consumer sentiment amid the COVID-19 outbreak.
The display panel business posted an operating loss of 290 billion won (238 million U.S. dollars) on revenue of 6.59 trillion won (5.4 billion U.S. dollars) for the first quarter.
The revenue grew 7.7 percent from a year earlier, but it was down 18.1 percent from three months ago. The display panel unit logged an operating profit of 220 billion won (181 million U.S. dollars) in the previous quarter.
Profit for panels used for mobile phones saw a decline because of slower sales and lower factory utilization amid weak seasonality, while large displays' operating loss narrowed thanks to favorable foreign exchange movements.
Samsung expected mobile display earnings to shrink further in the second quarter on falling demand in the United States and Europe, driven by the COVID-19 outbreak, forecasting that earnings from large displays would be weak owing to the market slump accelerated by the delayed mega sporting events.
The IT & mobile communications division, which produces smartphones, logged an operating profit of 2.65 trillion won (2.2 billion U.S. dollars) on revenue of 26 trillion won (21.4 billion U.S. dollars) in the first quarter.
The revenue diminished 4.4 percent from a year earlier as the COVID-19 outbreak weakened smartphone demand across the globe, but the operating profit jumped 16.7 percent on higher sale of premium products.
Samsung forecast that mobile phone demand would drop sharply in the second quarter on the back of an economic downturn, driven by the coronavirus pandemic.
Earnings from the networks business improved in the first quarter thanks to the expansion of 5G commercialization in South Korea and other markets, Samsung noted.
The consumer electronics division posted an operating profit of 450 billion won (370 million U.S. dollars) on revenue of 10.3 trillion won (8.5 billion U.S. dollars) in the March quarter.
The revenue was up 2.6 percent from a year earlier, but the operating profit tumbled 16.7 percent on lower global demand and weak seasonality.
Samsung expected the sale of TVs to decline in the second quarter on weaker consumer demand and the canceled major sporting events, prompted by the COVID-19 outbreak.
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