For now, it's the chips and not smartphones driving Samsung's strong first quarter numbers. Image Credit: Gulf News Archive

Seoul: Samsung Electronics Co.’s better-than-expected profit revives hopes that a surge in internet usage from people sheltering during the pandemic will help make up for a drop-off in demand for smartphones and other consumer electronics.

Korea’s largest company posted operating profit of 6.4 trillion won ($5.2 billion) in the March quarter, surpassing the average analyst estimate by 3.6 per cent. Sales rose 5 per cent to 55 trillion won. The company didn’t provide net income or break out divisional performance, which it will do later this month when it releases final numbers.

Samsung - one of the first major technology corporations to unveil March quarter results - demonstrates how the coronavirus outbreak is exerting an uneven impact on the global electronics sector in the short-term. Soaring online activity from gaming to video streaming is driving sales of semiconductors - the lubricant for the internet and Samsung’s most profitable business - even as worsening employment prospects curtail spending on gadgets such as the company’s just-released flagship Galaxy S20.

The Asian giant’s solid performance underscores expectations for resilient chip demand since Micron Technology Inc.’s stronger than anticipated outlook. Much now hinges on whether governments can mitigate the fallout from potentially the worst global economic shock in at least a generation.

“Right now, we can only project a picture of the second quarter: soaring demand in server chips may offset slump in display, mobile and consumer electronics,” said Song Myung-sup, analyst at HI Investment & Securities Co. in Seoul. “The problem is, if the pandemic continues further, we can’t guarantee that the uptrend in expansion of servers will be sustainable in the second-half of this year.”