Samsung Earnings Beat Expectations, Apple Makes ~$950M Payment to Samsung Display

Published July 13, 2020

Samsung released its guidance for revenues and operating profit for the 2nd quarter of 2020, beating consensus expectations for operating profits driven by strong memory demand in Semiconductors and a one-time payment from Apple in Display.

Samsung reported Q2 revenue guidance of KRW 52 trillion (US$46.0 billion), which would represent a 7% decline Y/Y in Korean won terms, or an 11% decline in US dollar terms, as the won has depreciated 4% in the last year. Samsung’s Q2 operating profit guidance of KRW 8.1 trillion ($6.6 billion) would be an increase of 23% in won terms and 17% in dollar terms. Operating profit guidance soundly beat consensus expectations of mid-6 trillion, while revenues edged analyst expectations of KRW 51 trillion.

Samsung Electronics Income Statement Highlights, 2Q 2018 – 2Q 2020

Source: Samsung Electronics Statements, DSCC Analysis

Samsung reported that its estimate of operating profit included a one-time gain related to its display business, according to a report at wsj.com, but did not disclose the amount. Last week theelec.net reported that Samsung Display is believed to have received KRW 900 billion from Apple for purchasing fewer OLED smartphone panels than required, but DSCC sources suggest that the payment is closer to US$950 million. The Apple payment likely turned what otherwise would have been an operating loss for display devices into an operating profit. The Q2 payment follows the pattern from a year ago, when DSCC estimated that Apple paid SDC KRW 900 billion in Q2 2019 for a shortfall in OLED panel orders.

Samsung’s semiconductor business benefited from strong demand for server memory chips as cloud computing companies beefed up their capacity to deal with a surge in work-from-home demand. Prices for DRAM and NAND flash increased in the 2nd quarter, driving semiconductor operating profits to an estimated KRW 5 trillion, according to theelec.net. Samsung’s mobile communications and consumer electronics businesses have been hurt by a demand fall-off due to the pandemic, but less than feared.

Samsung will release its full financial reports later this month.

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Written by

Bob O'Brien

bob.obrien@displaysupplychain.com