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By Woo Jae-yeon
SEOUL, July 28 (Yonhap) -- Samsung Electronics Co. on Thursday reported its second-quarter net profit of 11.09 trillion won (US$8.5 billion), up 15.2 percent from a year earlier, on the back of robust demand for server chips.
Operating profit for the April-June period rose 12.2 percent on-year to 14.09 trillion won, the company said in a regulatory filing.
Revenue rose 21.3 percent to 77.2 trillion won, the second-highest quarterly revenue ever and a record for a second quarter.
The world's largest memory chip and smartphone maker said its chip division posted 28.5 trillion won in revenue and 9.98 trillion won in operating profit, performing better-than-expected, thanks to continued demand from server clients and a strong dollar.
Operating profit in the chip business took up 70 percent of Samsung's total profit in the three months ending in June.
Samsung said a weak South Korean currency against the U.S. dollar resulted in an approximately 1.3 trillion-won company-wide gain in operating profit compared with the previous quarter.
The South Korean tech giant does its chip business mostly in U.S. dollar but reports its earnings in Korean won. A weak won drives up the value of an exporter's dollar-denominated earnings when converted into the Korean currency.
Samsung's foundry business reported a record high quarterly profit as the company continued to woo more global customers for its made-to-order semiconductors.
Samsung said it aims to "exceed market growth by adding new global clients while continuing to reinforce technological competitiveness."
It also hinted at the possibility of raising foundry fees during an earnings call Thursday.
"We will be able to continue to improve our profitability (of the foundry business) by introducing healthier prices and also improving our cost side," it said.
"If we are able to continue our growth momentum that we are seeing, we expect that we will be able to reach a level of profitability where we will be able to source the funding of investment from our own operation."
Early this week, Samsung marked the first shipment of 3-nanometer semiconductors built on Gate-All-Around (GAA) technology, the fastest and most efficient chips to date, faster than its foundry rival TSMC of Taiwan.
The advancement in the sophisticated chipmaking technology is expected to bring Samsung more customers looking for powerful chips.
While server demand remained solid, demand for consumer products such as mobile phones and PCs slowed due to "widening impacts of macro issues, resulting in DRAM and NAND shipments to come in below bit growth guidance," it said.
Samsung's mobile and network business logged 29.34 trillion won in revenue and 2.62 trillion won in operating profit for the second quarter. Both demand and profitability have declined from the previous quarter.
The mobile business reported a sequential decline in earnings amid rising material and logistics costs. But sales of its premium smartphone models contributed to the increased revenue, it said.
Samsung eyes to boost its sluggish phone business with the launch of new foldable smartphones, scheduled to be unveiled on Aug. 10, which the company hopes will become "mainstream" that would surpass sales of the Galaxy Note series.
During the call, it denied a rumor that the company was considering closing its Exynos business, calling it "completely not true."
"We're currently in the process of reviewing and revising our SoC business model with a focus on gaining mid- to long-term competitiveness by efficiently dedicating our resources," it said. System on a chip (SoC) refers to an integrated circuit that combines many elements of a computer system into a single chip.
Earlier, market rumors had it that Samsung could ditch its own mobile processor, Exynos, due to its alleged high defect rate.
In the second half, Samsung forecast server demand, which it said is "less sensitive to geopolitical issues and macro issues," will continue as global tech firms are expected to expand their investment in core infrastructure and new growth areas, such as artificial intelligence and 5G.
Given the high uncertainties, however, "Even the server customers will have to go through an inventory adjustment, which may impact the memory demand," when and if the global economy goes into a recession, Samsung said.
It also warned of softening demand for consumer products amid rampant inflation.
"Smartphone market demand is forecast to stay similar year-on-year or show single-digit growth due to prolonged geopolitical issues and economic uncertainties," it said.
Samsung Electronics shares slightly rose 0.16 percent to close at 61,900 won Thursday, lower than the wider market's 0.82 percent gain, as investor sentiment continued to be dampened by dim outlook for the chip industry in the second half.