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Electronics

Samsung flags COVID and trade war risks after strong Q2

April-June operating profit jumps 24% on rising chip demand

Samsung has benefited from the spread of remote working amid the coronavirus pandemic.   © Getty Images

SEOUL -- Samsung Electronics said Thursday it is bracing for further coronavirus disruption and worsening US-China tensions, but reassured investors that its global supply chain will be able to withstand "any shocks."

In its second-quarter earnings call, the world's largest memory chip and smartphone maker said it will leverage its global network of more than 230 production, sales and research sites to fend off any supply chain disruptions caused by geopolitical risks or recurring waves of COVID-19 infections.

"With our new supply chain management strategy, we aim to withstand any shocks," said Kang Tae-gyu, an investors relations director at the company, in an earnings conference call. "There are still many uncertainties such the U.S.-China trade conflict and the COVID-19."

Kang did not go into detail as to what this new strategy will entail.

His comments however come amid a sharp rise in tensions between Washington and Beijing. The U.S. ordered last week China to shut down its consulate in Houston "in order to protect American intellectual property and Americans' private information." China retaliated by closing America's consulate in Chengdu.

In announcing its results for the second quarter, Samsung cited both positive and negative impacts from the coronarivus pandemic. The South Korean tech titan said its operating profit rose 23.5% on the year to 8.2 trillion won ($6.9 billion) in the April-June period as server and PC chip prices rose, thanks to growing demand for remote working and learning. Smartphones sales, however, took a hit many stores were forced to close due to lockdowns.

"Even as the spread of COVID-19 caused closures and slowdowns at stores and production sites around the world, the company responded to challenges through its extensive global supply chain, while minimizing the impact of the pandemic by strengthening online sales channels and optimizing costs," Samsung said in a statement.

The company also said it will invest "preemptively" in infrastructure, including the cloud business. Samsung invested 17.1 trillion won in the first half, mostly in semiconductor production lines, up 59.8% from a year ago.

"Some may not understand why we invest in infrastructure preemptively when uncertainties remain, but it is true that such investment helped stable growth. As a leader, we will keep investing to boost growth in the IT sector," Kang said.

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