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July 7, 2017

Samsung Predicts Best-Ever Profits in Last Quarter

by John_A

Samsung tipped its best-ever operating profit on Friday, with likely record earnings in the company’s second quarter ending in June (via Reuters). The Apple rival predicted quarterly operating profit of 14 trillion won ($12.11 billion), a 72 percent jump from a year earlier. The estimate includes sales from the Galaxy S8 for the first time, but analysts pointed to Samsung’s components business as the main driving force behind the latest projected figures.

Samsung has yet to provide a breakdown of its performance over the April-June period, with a full earnings report due later this month, but the South Korean company is known to have benefitted from higher prices for the memory chips it supplies that go into servers and smartphones. Samsung expects revenue to be up 18 percent year-over-year at 60 trillion won. Shortages for both DRAM and NAND chips are expected to persist for the rest of the year, increasing the likelihood that 2017 could represent Samsung’s best-ever annual earnings.

Ironically, Samsung’s continued success is expected to hinge increasingly on the performance of its biggest rival. Apple has reportedly turned to Samsung for more NAND chip supplies for its upcoming phones, since Samsung has relatively stable yield rates and has scaled up its output while other chip suppliers have lagged.

Samsung is also being helped by its sales of OLED panels, which are expected to become the go-to display standard over the coming years. Apple has reportedly signed a two-year contract with Samsung for the supply of up to 92 million curved OLED panels, as it attempts to ramp up capacity for this year’s release of its high-end “iPhone 8”, before transitioning fully to OLED displays for all its phones in the second half of 2018.

Samsung said on Tuesday it would invest $18.6 billion to extend its lead in memory chips and next-generation displays. Meanwhile, sales of the upcoming Galaxy Note 8 will be closely watched in the third quarter, after its predecessor was pulled from the market last year because of fire-prone batteries. Samsung is expected to unveil the handset in August.

Tag: Samsung
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