Samsung Electronics Estimates 56% Jump In Profit

Ruben Fields
April 8, 2018

The South Korean company is expected to rake in KRW60 trillion in consolidated sales (about $56.1 billion) and KRW15.6 trillion in operating profit (around $14.6 billion).

The global semiconductor leader and Apple Inc smartphone rival forecast its January-March profit to leap 57.6 per cent from a year earlier to 15.6 trillion won (S$149.4 billion), beating an average forecast of 14.5 trillion won from a Thomson Reuters survey of 21 analysts.

Samsung Electronics reported a 58% surge in profit, topping projections as demand for its memory chips remained strong enough to outweigh concerns about display supplies to Apple. The company became the world's biggest chipmaker in Q4 past year, knocking Intel off the top spot for the first time since 1992.

The shares of Samsung fell about 1% in Seoul, as the KOSPI index declined on concern over United States tariffs.

Analysts said memory chips were still the main driver of Samsung's profits, making up about 75 percent of its operating income, despite fears over the possibility that the industry cycle may have peaked.

Prices of NAND chips already started to lose momentum in late 2017 and analysts have been keeping a close eye on any signs that may indicate a peak in the price of DRAM.

Samsung will benefit from new phone releases such as its new Samsung Galaxy, but it faces stiff competition from last year's iPhone X release. The stock is down more than 5% this year, after climbing 41% in 2017.

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Samsung Group, the country's top family-run business empire, has come under greater scrutiny since heir apparent Jay Y. Lee received a suspended jail term in February for bribing a former president.

Samsung will publish detailed earnings in late April. But the sentencing was reduced in February to a suspended jail term on appeal, which saw the 49-year-old scion released after spending almost a year in jail.

The semiconductor business forms the largest portion of Samsung's profit.

"There is no disagreement on how well Samsung's chip business is doing, but Samsung's mobile business must be doing better than we had expected", he said.

Last month at a shareholders' meeting, Samsung reorganised its leadership to separate the roles of business executives and board members, responding to public calls to improve its transparency and accountability.

Analyst Kim Yang-jae said demand for servers has offset sluggish sales for iPhone X as well as premium Chinese smartphones, and that demand is surpassing market expectations.

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