Samsung Electronics expects record-high Q2 profits

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Samsung Electronics expects record-high Q2 profits

Helped by the solid chip sales, Samsung's operating margin, which is the ratio of operating profit to revenue, posted 23.3 per cent in the second quarter, up 7.3 percentage points from a year earlier.

Considering the forecast that Samsung Electronics' operating profits in the second quarter will increase 3.26 trillion won (US$2.82 billion) from 9.9 trillion won (US$8.57 billion) at the first quarter, most of the increase in overall operating profits will come from Samsung Electronics.

South Korean tech giant Samsung looks set to report a dazzling increase in sales and profits thanks to soaring demand for its memory chips in a range of consumer devices.

Earlier in the day, Samsung reported its best-ever quarterly profit, beating expectations and putting it on track for record annual earnings on the back of a memory chip super-cycle.

Analysts believe Samsung's semiconductor division, which makes memory chips for mobile devices and servers, generated almost 60 per cent of the quarterly profit thanks to massive growth of connected devices and data that fuelled demand.

"Samsung is believed to have topped the list of global IT companies, surpassing Intel and Apple, in terms of operating profits for the first time in history", KB Investment and Securities Co analyst Kim Dong-won said. While the three brand new iPhones Apple is set to release this year will undoubtedly have an impact on Samsung's smartphone sales as well, the company undoubtedly isn't anxious. Why?

The world's top maker of smartphones and memory chips will invest 20.4tn won ($17.7bn) by 2021 to expand and upgrade its chip plants in the South Korean cities of Pyeongtaek and Hwaseong, it said in a statement. The numbers beat projected estimates by analysts and indicate a more-than-positive state for Samsung, ahead of its announcement of the Galaxy Note 8 later this year.

The profits indicate strong performances from all its divisions. Samsung is a well-renowned company known not only for production and sales of semiconductors but also smartphones and servers even when the supply is limited.

Analysts say a global shortage of chips may persist throughout 2017, driving prices higher and benefiting major suppliers such as Samsung and another South Korean chipmaker, SK Hynix.

Samsung shares, the top weighting in the iShares MSCI Emerging Markets exchange-traded fund (EEM), moved fractionally lower in local trading, but was up 4% in USA over-the-counter trading.

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