Samsung Electronics developed the industry’s first 512GB DDR5 memory module using the HKMG process.

Samsung Electronics achieved an earnings surprise by surpassing 12 trillion won in operating profit in the 2nd quarter of this year on the back of the semiconductor sector’s super cycle.

Although the smartphone business, which led the Q1 business performance, faltered a little bit, the semiconductor business surged. The premium TV and home appliance businesses also put up a good show.

Q2 sales, which declined over Q1 sales, were the largest-ever for any Q2.

The provisional Q2 business performance compiled by Samsung Electronics showed that the company posted 63 trillion won in sales and 12.5 trillion won in operating profit, the company said on July 7.

These represent an 18.94 percent surge and a 53.4 percent jump in sales and operating profit, respectively, compared to the same period a year earlier. In Q2 2020, Samsung Electronics chalked up 53 trillion won in sales and 8.15 trillion won in operating profit. The latest figures are over 10 percent more than market consensus.

Operating profit was the best in 11 years, since the company saw sales surge to 17.57 trillion won in Q3 2018 on the back of another semiconductor super cycle.

Q2 sales declined from 65.39 trillion in Q1 sakes, but operating profit swelled more than 3 trillion won. The semiconductor business, which remained sagging below expectations, led the good Q2 business performance.

Samsung Electronics released the new product LPDDR5 multi-chip package combining a high-performance mobile DRAM and NAND flash memory. (Photos: Samsung Electronics)

Samsung Electronics did not disclose the results of each subsidiary, but the semiconductor business is predicted to have earned between 7 trillion won and 8 trillion won in operating profit in Q2 in consideration of a higher-than-expected rate of operating profit to sales.

The semiconductor business saw the Q2 rate of operating profit to sales jump more than two times, to 3.4 trillion won in Q1. It accounts for almost 60 percent of Samsung Electronics’ total operating profit.

A semiconductor super cycle, which appeared between 2017 and 2018, is forecast to begin in earnest from Q2. The semiconductor market showed signs of a rally on the back of strong sales of PC chips, spurred by contactless demand related to the pandemic.

The market survey firm TransForce reported that DRAM contract price soared a maximum 26 percent in April, the highest since the semiconductor super cycle in 2017.

Samsung Electronics’ plant in Austin, Texas, which was forced to close due to cold storms in early this year, was restored to normal in May, minimizing losses the company experienced in Q1.

The IT and mobile communications business led the strong Q1 business performance by seeing the operating profit rise to 4.4 trillion won thanks to the early release of the smartphone Galaxy 21., but it is expected to slow its growth momentum into Q2.

The setback was owed to the release of no new products and declining demand and disruption of production in areas such as India and Vietnam, caused by the spread of COVID-19 pandemic. A shortage of application processors in some models also had a bad impact on production.