Samsung Electronics Has Record Operating Profits Thanks To Memory Chips

Samsung Electronics reported record operating profits for its second quarter, ending in June, and is on track to see record profits for the year thanks to demand for its semiconductors, mobile phones and televisions.

Earlier Thursday (July 27), the South Korean consumer electronics company reported operating profits of $12.67 billion, up 72.7 percent from a year ago. It’s also slightly higher than the operating profit it forecasted in July, reported CNBC. Revenue jumped 19.8 percent to 61 trillion won, which matches its previous forecast.

The semiconductor unit was the biggest contributor to Samsung's record operating profit, with revenue increasing to a record 8 trillion Korean won from 2.6 trillion won in last year’s second quarter. Driving the surge in demand were memory chip constraints which also boosted the average selling prices.

On the mobile division front, where Samsung has a "hit" on its hands with the Galaxy S8, the company reported profits of 4.1 trillion won, lower than the 4.3 trillion from a year ago. While some analysts have said the S8 isn’t doing as well as the Galaxy 7 lineup, mobile chief Koh Dong-jin noted earlier in July that cumulative sales of the Galaxy S8 and S8+ smartphones were 15 percent higher than the previous model.

Samsung does expect earnings in the mobile phone business to decline in the third quarter amid an expected slowdown in sales of the S8. Mid- and lower-end phones, according to the company, account for more of the total shipments.

“The mobile business will aim to sustain the strong sales momentum of premium smartphones through the release of a new Galaxy Note smartphone and continued sales of the Galaxy S8 and S8+. It will also continue to improve the lineup efficiency in the mid- to low-end segment to maintain profitability,” Samsung said in prepared remarks.

Samsung also noted it is buying back 1.7 trillion won worth of common shares and is expecting strong results in the current quarter.

"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," Samsung Electronics said in the statement.



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