Samsung posts best quarterly profit amid chip boom

The Korea Herald/ANN

Samsung Electronics posted its best quarterly profit in the second quarter due to a boom in memory chips.

The South Korean electronics giant said Thursday that it posted 61 trillion won ($ 54 billion) in sales and 14 trillion won in operating profit in the April-June period, rising 19 percent and 72 percent, respectively, from the previous year.

Samsung said its record-high earnings were mainly buoyed by the booming chip market amid rising demand for storage products.

Samsung’s chip unit posted 17.5 trillion won in sales and 8 trillion won in operating profit, accounting for more than half of the firm’s total operating profit. This could also be the first time that Samsung beats the world’s largest chipmaker Intel, which is predicted to post 16.4 trillion won in the second quarter.

Samsung is also upbeat about its business in the second half of the year.

“As for the NAND outlook, we expect strong industry demand from flagship smartphone launches and the expansion of new data centers, while restricted supply conditions will also remain,” a Samsung spokesperson said.

Earlier this month, Samsung announced plans to invest $18 billion to expand and upgrade its chip plants in Korea, with the aim of extending its lead in the market.

Samsung’s display unit posted 7.7 trillion won in sales and 1.7 trillion won in operating profit for the second quarter, driven by 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 displays in the second half due to its supply to the US tech giant Apple, but the initial costs of its new OLED production line during the third quarter is expected to weigh on profit.

The tech firm’s smartphone unit posted 30 trillion won in consolidated revenue 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 significant 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 that despite the strong sales performance of premium smartphones, its total smartphone shipments remained at a similar level quarter on quarter, due to decreased sales of mid- to low-end products.

According to Samsung, 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.