Global uncertainties surrounding Russia's war against Ukraine, high inflation and the Covid pandemic have hit the consumer electronics market.

Samsung Electronics, the largest maker of electronic memory components and smartphones, warns that business with computers and smartphones will remain weak in the second half of the year.

Samsung is considered an indicator for the industry because its electronic components and displays are in demand by many electronics industry giants such as Apple.

In the second quarter from April to June, Samsung increased profits by 15.1 percent to 11.1 trillion won (8.35 billion euros).

The company benefited from a strong US dollar and continued high demand for memory chips for server computers used in large data centers and for cloud applications.

Revenue rose 21.3 percent to 77.2 trillion won, the highest for a fiscal second quarter.

Operating profit was 14.1 trillion won, up 12.2 percent from a year ago.

The solid figures only show on closer inspection that the company has probably passed the peak of the surge in demand driven by the pandemic.

Operating profit, for example, rose by less than 20 percent for the first time since spring 2020.

"Huge uncertainty in the market"

The most important business area for Samsung remains the business with semiconductors and above all with memory components.

The semiconductor division increased operating profit by 44 percent year-on-year to 9.98 trillion won.

Sales rose 24 percent to 28.5 trillion won.

However, the outlook for the coming year has clouded over and is being determined by uncertainty about consumer demand, bottlenecks in primary products and rising material costs.

Han Jin-man, the vice president responsible for memory components, spoke to analysts and journalists about "huge uncertainty in the market" which is being fed by a large number of macroeconomic problems.

He also warned that lead times for semiconductor production equipment are long and the market could grow much more slowly in the coming year.

Samsung expects a mixed picture for demand for its semiconductors.

According to the notes to the quarterly results, chip demand for smartphones and computers for private consumers will remain weak in the second half of the year.

As a risk, Samsung names the fact that corporate demand for computers could also decrease.

On the other hand, Samsung forecasts continued solid demand in the business with storage elements for server computers, which are used in large data centers and for cloud applications.

Meanwhile, market observers such as Trendforce are forecasting that the prices for DRAM and NAND type memory components will fall at double-digit rates in the coming months.

Worry about a recession

The day before, SK Hynix, another major South Korean manufacturer of memory components, warned that the market for memory chips will grow much more slowly this year than expected at the beginning of the year.

Fearing a recession, customers are starting to cut costs, SK Hynix explained.

The company announced that it will significantly revise its investments for the coming year.

Like Samsung, SK Hynix has not yet announced any concrete figures for the investment plans.

Samsung also painted a gloomy picture for the second most important business area, the smartphone business.

The company predicted that demand for smartphones would not increase in the second half of the year compared to the previous year, or only in the single-digit range, citing the ongoing geopolitical tensions and economic uncertainties as the reason.

Samsung wants to counteract this with a higher proportion of high-priced devices and the attempt to establish foldable smartphones more firmly in the market.

This recipe already worked in the second quarter to at least increase sales.

Operating profit at the Mobile Devices and Networks Division shrank 18.9 percent to 2.6 trillion won in the April-June period due to rising material and logistics costs.

However, sales rose 29.4 percent year-on-year to 29.34 trillion won.

A contributing factor was that Samsung overcame delivery problems for its top models.