South Korean conglomerate Samsung is on course for a record Q2 with its success being attributed to its flagship smartphone - the Galaxy S8. In addition to this, Samsung’s operating profit has also been boosted by its strong component sales.
It’s welcome news for Samsung and its stakeholders - after the much publicized disaster it ensued with the Galaxy Note 7 recall last year, which cost the organization millions. However, it has responded well, and the success of its new smartphone device is propelling that comeback.
A spokesman for Samsung indicated that the company expects to report an operating profit of around KRW14 trillion ($12.1 billion), compared with a figure of KRW8.14 trillion from the same period last year. The Wall Street Journal has reported that the figures released by the South Korean smartphone manufacturer is likely to result in Samsung edging out Apple to become the most profitable technology company during that period.
Analysts have suggested that from a smartphone perspective, both Apple and Samsung at very different junctures in their respective roadmaps, with Samsung developing a new flagship model, while Apple’s iPhone is mid-cycle. However, it has been claimed that Samsung invested heavily in what was an aggressive marketing campaign, and that is expected to have an impact on smartphone profitability.
Other industry commentators have attributed Samsung’s roaring success in Q2 down to strong memory chip prices. Reuters has reported that demand will outstrip supply for these products for the rest of 2017, which boost margins for suppliers. Samsung is also expected to supply OLED screens to Apple for its next-generation iPhones later this year. In addition to this, its own Galaxy S8 is expected to continue to boost smartphone sales.
In addition to overtaking Apple as the most profitable technology company, some analysts have suggested Samsung’s semiconductor sales are on course to outstrip those of Intel in Q2. In recent months Samsung announced a huge investment in its components business, which has also been a key driver for profitability.
Samsung will provide a detailed breakdown of its performance when it releases its Q2 results later this month.
