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Samsung Likely to Report 15 Percent YoY Rise in Server Chip Profits, Analysts Say

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Samsung is likely to turn in its best April-June profit since 2018 with a 15 percent year-on-year rise, as lingering demand for its memory chips from server customers offsets lower sales to inflation-hit smartphone makers.

Operating profit for the world’s biggest smartphone and memory-chip maker likely jumped to KRW 14.46 trillion (roughly Rs. 88,000 crore) in the quarter, according to a Refinitiv SmartEstimate from 24 analysts, from KRW 12.57 trillion (roughly 76,000 crore) roughly a year earlier.

Its chip earnings likely soared 49 percent to KRW 10.3 trillion (roughly Rs. 62,500 crore), an average of seven estimates shows. The chip business accounts for about half of the South Korean tech giant’s profits.

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On the overall outlook for global memory chip demand, Park Sung-soon, an analyst at CAPE Investment & Securities, said US data centre firms such as Amazon, Microsoft, Google, and Meta are expected to continue buying “to meet expanding demand for cloud services”.

Chip inventories at these companies are not high compared to 2018 levels, Park added.

Making a case for strong server demand, Taiwanese contract electronics supplier and Apple iPhone maker Foxconn on Monday raised its full-year outlook and said it was optimistic about the third quarter.

Still, chipmakers worldwide are facing cooling demand after two bumper pandemic years when people bought phones and laptops to work remotely, which resulted in a chip shortage and forced companies including automakers to pay top dollar for key chips, pushing their prices up.

Also, China’s recent COVID-19 lockdowns choked consumer demand and boosted inflation in the world’s second-largest economy, resulting in steep falls in smartphone sales.

Concerns about a downturn in major markets, including the United States, due to high inflation and the war in Ukraine are also prompting consumers and corporates to tighten budgets.

Weakened considerably

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Rival memory-chipmaker Micron Technology last week forecast much worse-than-expected quarterly revenue and said the market had “weakened considerably in a very short period of time”, though it was confident about long-term demand.

Data provider TrendForce said prices of specific DRAM chips, used in tech devices and servers, fell about 12% last month from a year earlier, signalling smaller margins for chipmakers in coming quarters.

Samsung’s mobile business profit is expected to have slipped some 17 percent to KRW 2.7 trillion (roughly Rs. 16,500 crore) from a year earlier, analysts said.

They expect the company’s smartphone shipments to have dropped to between 61 million and 68 million units in the second quarter, from 74 million in the first.

Industrywide shipments of smartphones to China — the world’s biggest smartphone market — are expected to shrink by 18 percent this year, according to Gartner.

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Shares in Samsung, which will announce preliminary results on Thursday, have fallen about 27 percent this year, versus a 38 percent slump in the Philadelphia Semiconductor index.

© Thomson Reuters 2022


Do Samsung’s Galaxy S22 and Tab S8 series have any Android competition? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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US Tightens Export Controls on Advanced Chips, Engine Technology Critical to National Security

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The US on Friday adopted new export controls on technologies that support the production of advanced semiconductors and gas turbine engines that it said are critical to its national security. The “emerging and foundational technologies” covered by the move include gallium oxide and diamond, because “devices that utilize these materials have significantly increased military potential,” the US Commerce Department said.

“Technological advancements that allow technologies like semiconductors and engines to operate faster, more efficiently, longer, and in more severe conditions can be game changers in both the commercial and military context,” said Commerce Under Secretary for Industry and Security Alan Estevez. “When we recognize the risks as well as the benefits, and act in concert with our international partners, we can ensure that our shared security objectives are met.”

The four technologies are among items that 42 participating countries reached consensus to control at December 2021 meetings. The US export controls cover a wider range of technologies, including additional equipment, software, and technology used to produce semiconductors than the international agreement.

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Gallium oxide and diamond allow semiconductors “to work under more severe conditions, such as at higher voltages or higher temperatures. Devices that utilise these materials have significantly increased military potential,” Commerce said.

The controls include ECAD, a category of software tools used for validating integrated circuits or printed circuit boards “that can advance many commercial as well as military applications including defense and communications satellites,” the department said.

In June 2021, the US-China Economic and Security Review Commission found the department was not doing enough to keep sensitive technology out of the hands of China’s military. The lag in developing the list of emerging and foundational technologies, as required by a 2018 law, may exacerbate national security risks, the report said.

© Thomson Reuters 2022


Will Snapdragon’s new 2022 chips make it more prominent as a brand? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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Lenovo Legion VR700 Headset Specifications Teased Ahead of August 18 Launch

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Lenovo Legion VR700 VR headset’s key specifications have been teased by the company. It will come with a Qualcomm XR2 processor, 4K RealRGB display, and a 6DoF interaction system, among others. As per the poster shared by Lenovo on Weibo, the headset seems to come with multiple cameras, presumably for inside-out tracking, a strap, and two controllers. It could be a possibility that this is a standalone VR headset just like the Mirage Solo headset, which Lenovo launched back in 2018.

As per an image shared by Lenovo on Weibo, the Legion VR700 will be powered by the Qualcomm XR2 processor, which supports 5G and offers improved CPU as well as GPU performance compared to the previous generation. The Lenovo headset is also said to offer up to 4 times improvement in video broadband, 6 times improvement in resolution, and 11 times improvement in AI performance.

Other features of the Lenovo Legion VR700 include a 4K RealRGB display with a high brush response, and support for 6DoF interactive system that allows for dual 6DoF spatial positioning and accuracy of head as well as hands. The headset is also teased to come with support for iQIYI’s resources and use the iQUT 2.0 standard. This essentially means that users will be able to get a better viewing experience.

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Lenovo’s previous offering, Mirage Solo, was announced back in 2018 as one of the first standalone headsets with motion-tracking technology, called WorldSense, which allowed the wearer to move around, lean, dodge or duck through space. It came with a controller similar to the wireless controller in Google’s Daydream headset.

The Mirage Solo was launched with a Snapdragon 835 processor paired with 4GB of RAM and 64GB of storage. It gets a 5.5-inch QHD LCD screen and a 4000mAh battery. The headset’s display offered a 110-degree field of view for immersive VR engagement.


What should you make of Realme’s three new offerings? We discuss them on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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China Claims US CHIPS And Science Act Will Disrupt International Trade, Distort Global Semiconductor Supply Chains

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China on Wednesday criticized a US law to encourage processor chip production in the United States and reduce reliance on Asian suppliers as a threat to trade and an attack on Chinese business. The law signed this week by President Joe Biden promises $52 billion (roughly Rs. 4,11,300 crore) in grants and other aid to investors in US chip factories. It responds in part to warnings that supplies might be disrupted if China attacks Taiwan, which produces up to 90 percent of high-end chips. China’s ruling Communist Party claims the self-ruled island as part of its territory.

The measure will “disrupt international trade and distort global semiconductor supply chains,” said a Foreign Ministry spokesperson, Wang Wenbin. “China firmly opposes that.”

Parts of the law “restrict companies’ normal investment and economic and trade activities in China,” Wang said, without giving details.

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Disruption in chip supplies following the coronavirus pandemic hampered production of goods from smartphones to autos and highlighted the world’s reliance on Taiwanese chips and Chinese factories that assemble most electronic devices.

Fears of disruption have been heightened by Chinese threats to attack Taiwan, which split with the mainland in 1949 after a civil war.

Beijing launched military drills around the island last week in retaliation for a visit by Speaker Nancy Pelosi of the US House of Representatives. China believes visits by American officials to Taiwan might encourage its leaders to make its de facto independence permanent, a step the mainland says would lead to war.

The “CHIPS and Science Act” calls for research spending that would total about $200 billion (roughly Rs. 15,81,900 crore) over 10 years, according to the Congressional Budget Office.

The Communist Party has spent tens of billions of dollars developing China’s own chip production industry. Its factories make low-end chips for autos and other products but cannot supply high-end smartphones and other devices.


Will Snapdragon’s new 2022 chips make it more prominent as a brand? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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