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March 19, 2024

Samsung expected to continue record-breaking profit in Q3

PUBLISHED : July 27, 2017 - 17:11

UPDATED : July 27, 2017 - 17:18

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[THE INVESTORSamsung Electronics, which posted record-high revenue, operating profit and net profit in the second quarter, is expected to post another top profit number in the next quarter on a continued chip boom and its new OLED panel supply for Apple’s new iPhones.

The Korean electronics giant said on July 27, it posted 61 trillion won (US$54 billion) in sales and 14 trillion won in operating profit between April and June, rising 19 percent and 72 percent, respectively, from the previous year. 



Samsung said the record profits were driven by its chips unit, which surpassed 8 trillion won in operating profit for the first time, accounting for more than half of the firm’s total operating profit.

The world’s largest memory chip maker -- and arguably the largest chipmaker, outstripping Intel this quarter -- offered an upbeat outlook on the coming quarter due to the continued chip boom amid rising demand for storage products.

“The demand for memory chips will continue to grow in the third quarter from servers and premium smartphones while restricted supply conditions will also remain,” said Jeon Se-won, an executive at Samsung Electronics’ chip business, on a conference call with analysts.

The UK research firm IHS Markit also forecast the global memory chip market would grow more than 30 percent this year as more digital devices require higher storage capacity.

Samsung’s display unit has also fared well, posting 7.7 trillion won in sales and 1.7 trillion won in operating profit due to increased sales of premium organic light-emitting diode displays and high-end, large-size liquid-crystal display panels.

The company forecasts increased sales of premium flexible OLED panels in the coming quarter due to its new supply to the US tech giant Apple’ iPhone 8 although the competition with Chinese rivals remains.

“The demand for OLED is expected to rise as more smartphone makers are adopting the flexible panels. Still, competition with Chinese rivals is also predicted to be fierce in the LCD area,” said Lee Chang-hoon, an executive at Samsung Display.

The initial costs of the new OLED production line during the third quarter is also expected to weigh on profit, Samsung said.

The mobile phone units of the world’s largest smartphone maker posted 30 trillion won in sales and 4 trillion won in operating profit for the second quarter. Although the profit falls short of the operating profit of 4.3 trillion won a year earlier, this is a recovery after plunging to 100 billion won in the third quarter of last year due to discontinued sales of the Note 7 in October. Samsung said it sold 93 million mobile phones in the April-June period and sales of smartphones accounted for 80 percent of total units sold. Six million tablets were sold.

“Sales of phones in the third quarter will be slightly up from this quarter but tablet sales will be at a similar level,” said Lee Kyung-tae, an executive of Samsung’s mobile division.

Samsung said demand for smartphones and tablets is forecast to increase in the second half of the year, as the market enters a period of strong seasonality. However, competition is expected to intensify with new smartphone models to be released by competitors.

Analysts predicted Samsung would post another record-breaking profit number in the third quarter. More than five local securities forecast Samsung’s operating profit would exceed 15 trillion won in the August-October period. 

“Samsung’s operating profit is estimated to exceed 15 trillion won in the third quarter, with its display unit posting 2 trillion won due to the new supply to Apple’ iPhone 8,” said Lee Jae-yoon, an analyst from Yuanta Securities Korea.

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)

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