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Samsung climbs on memory boom

by on27 July 2017


Booms are better than fire

Samsung Electronics  memory chip boom that propelled it to record profit in the second quarter is likely to continue in the third, just as revenue is widely expected to benefit from sales of OLED screens to the fruity cargo-cult Apple.

The world's biggest maker of memory chips, smartphones and TVs is set to smash its annual profit record after better than forecast performance in its mobile business lifted April-June profit slightly above its early-July guidance, analysts said.

Samsung sang: "Looking ahead to the third quarter, the company expects favorable semiconductor conditions to continue. Although overall earnings may slightly decline quarter-on-quarter as earnings weaken for the display panel and mobile businesses."

Memory chip makers are enjoying a so-called super-cycle where increasing demand for more sophisticated devices, such as cloud computing data center servers, requires higher numbers of more expensive chips. That has brought about a supply shortage which is pushing prices even higher and widening profit margins.

Chips were Samsung's top earner in the three months through June, as more than tripled from the same period a year earlier to a record 8 trillion won ($7.20 billion). Continued demand for DRAM and NAND chips and supply constraints are likely to sustain profit margins for the foreseeable future, Samsung saidback

Samsung in a filing said operating profit rose 72.7 percent n the second quarter. Revenue rose 19.8 percent  which was also in line with its earlier estimate.

In its mobile division, Asia's third most-valuable company by market value reported 4.7 percent fall in profit, slightly milder than the decline forecast in early July.

Mobile chief Koh Dong-jin this month said cumulative sales of new flagship Galaxy S8 and S8+ smartphones, released April, were 15 percent higher than those of its predecessor.

However, the firm expects mobile earnings to dip in the third quarter as S8 sales trail off, mid- to low-tier models take up a larger share of total shipments, and marketing costs increase for the Galaxy Note 8.

Apple is widely tipped to adopt Samsung's organic light-emitting diode (OLED) display for the next iPhone expected in the second half of the year. Subsidiary Samsung Display Co Ltd has an over 90 percent market share in smartphone OLED screens.

However, price competition in liquid-crystal displays (LCD) used in low- and mid-tier handsets is expected to cut margins.

 

Last modified on 27 July 2017
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