Surge in chip demand helped to turn crisis into opportunity
Samsung Electronics showed a stronger-than-expected performance in the second quarter, getting over unfavorable factors caused by the coronavirus pandemic. In a preliminary earnings report released Tuesday, the global tech giant projected its second-quarter operating profit would exceed 8 trillion won ($6.7 billion). This is a 25-percent increase from the first quarter when the COVID-19 shock began to take shape. The three-month profit figure also represented a 22-percent rise compared with a year ago when the global economy was free from disastrous factors. All this reaffirmed the competitive edge of the world's largest maker of memory chips and smartphones.
Propelling the company's earnings surprise was its flagship semiconductor division. The price of server DRAM chips shot up to $140 in the second quarter, as life and work rapidly shifted to a non-contact pattern, such as working from home, video conferencing and online education, new orders from server and PC makers soared. The hard work by Samsung Electronics Vice Chairman Lee Jae-yong should not be omitted, either. Lee visited the company's memory chip plant in Xian, China, in May. He was the only business leader to visit China in the middle of the country's COVID-19 outbreak. He also unveiled an 18-trillion won investment plan to build an extreme ultraviolet (EUV) foundry plant at home.
The company's smartphone and consumer electronics divisions remained in relative slumps compared to the preceding three months. However, both the company and industry watchers expect the two sectors will show signs of rebound soon. The sales of TVs, fridges and other home appliances are likely to enter into a boom once brick-and-mortar stores resume operations, and coupled with rising demand for premium models this will drive up profits.
Unlike the “good defense” put up by the world's top-class IT company, however, the rest of Corporate Korea is surrounded by a hostile environment, including a looming second viral wave and trade conflicts among major economies. Korea Inc. can ill afford to relax even for a moment. The real fight to maintain economic vigor amid the protracted pandemic has yet to begin in earnest. Now is the time for the government to support the reviving business investment by reducing regulations and increasing incentives.