Tight chip supply lifts Samsung to record quarterly profit
Samsung Electronics reported record quarterly profits on Thursday, driven by elevated prices of memory chips, the launch of the Galaxy S8 smartphone and keen demand for flat panel displays.
Net profit for April-June climbed 40.6 per cent from the previous quarter to Won10.8tn ($9.7bn), besting a median estimate of Won9.8tn from analysts surveyed by Bloomberg. Sales grew 20.8 per cent to Won61tn and operating profit climbed 42.4 per cent to Won14.1tn.
Samsung said it expected favourable semiconductor conditions to continue in the third quarter but cautioned that earnings could slightly decline quarter-on-quarter as income from its display panel and mobile businesses weaken. It expects the chip business to continue driving growth throughout the second half, but said that pressure from an industry increase in LCD supply “may remain a concern”.
The company’s semiconductor unit drove earnings once again in the second quarter, with operating profit of Won8tn up 27.3 per cent from the previous quarter and accounting for more than half of headline operating profit.
Consolidated revenue of Won17.6tn was driven by demand for server Dram, a memory chip, and solid-state drives, with limited supply driving up prices.
For the second half of 2017, Samsung said it expected “strong industry demand from flagship smartphone launches and expansion of new datacentres, while restricted supply conditions will also remain”.
Samsung’s display panel business saw operating profit rise 31.5 per cent quarter-on-quarter to Won1.7tn, just over 12 per cent of total profits, thanks to consolidated revenue of Won7.7tn from increased sales of premium OLED displays and big-screen LCD panels.
OLED stands for organic light emitting diodes. It is a low-energy display that is in high demand from mobile phonemakers.
The company’s mobile division saw operating profit jump 96.1 per cent from the previous quarter to Won4.1tn thanks to a rise of 27.7 per cent to Won30tn in sales, owing largely to the Galaxy S8 smartphone line. It expects both metrics to decline in the third quarter as it launches a new Galaxy Note and momentum from the launch of the Galaxy S8 fades.
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