(iTers News) - Thanks to favorable memory chip and display market conditions such as demand boom and price hikes, Samsung Electronics has scored the best quarterly sales and operating profit ever on record.

samsung



Riding on the coattails of booming demand for memory chips and display panels, the world’s largest electronics maker today said in its regulatory filing that it posted an operating profit of 14.07 trillion won, a whopping 73% jump year-on-year in the 2nd quarter ended on June 30, 2017.

The 2nd quarter sales and operating profit is the highest ever. The Korean tech giant’s consolidated revenue increased by 19.7% year-on-year to an all-time high of 61 trillion won.

The ever high results were contributed by the favorable memory chip market conditions.

Contributing to 57% of total operating profit, Samsung’s semiconductor business chalked up operating profit of 8.03 trillion won in the 2nd quarter of 2017, which is 3.04 times bigger than a year ago, on sales of 17.58 trillion won, up 46% year-on-year.

Data hungry applications are driving demand for memory chips and pushing the prices sky-high.

Especially, adoption of NAND flash in server and PC market is ever increasing.

As servers need to process larger data traffic and as the price gap between NAND flash memory chip-based SSD and conventional HDD is narrowing, more server makers are turning to better performing SSDs.

Meanwhile, the booming demand for picture-like OLEDs and price hikes in LCDs greatly improved the profitability of Samsung’s display business.

The Korean electronics maker’s display business netted operating profit of 1.71 trillion won in the 2nd quarter, up 1121% year-on-year from 0.14 trillion won of 2016, on sales of 7.71 trillion won, up 20% year-on-year.

More smartphone makers continue to shift to flexible OLED, which is currently near-dominated by Samsung, to build their flagship smartphones.

Samsung’s mobile business is recovering with the launch of its new flagship smartphone Galaxy S8 released early this year.

Samsung’s IT & mobile communications or IM business marked operating profit of 4.06 trillion won in the 2nd quarter, down 6% year on year. Yet when compared to the previous quarter, it is a 97% jump. It inked sales of 30.01 trillion won, up 13% year-on-year.

The good sales of new flagship smartphone Galaxy S8 driven the better sales than the first quarter of 2017, but the operating profit is lower than a year ago because of the squeezing profitability of low- and middle-range smartphones.

Samsung’s low cost smartphone sales in markets like China have been greatly decreased. Samsung’s smartphone shares fallen to 3% in Chinese market, being in the 6th place after Chinese smartphone makers like Huawei, Oppo, Vivo, and Xiaomi and Apple.

Samsung’s consumer electronics or CE business continues to dwindle.

The CE business has inked operating profit of 0.38 trillion won in the 2nd quarter, down 68% year-on-year. It reported sales of 10.92 trillion won, down 1% year-on-year.

The Korean company said the increasing panel price decreased the profitability of TVs. It added that increasing price of components and materials is decreasing the overall profitability of overall consumer electronics products.

The new audio business of Samsung Harman, which acquisition was completed in March, also reported operating profit of 0.01 trillion won in the 2nd quarter, down 50% compared to the previous first quarter of 2017.

Samsung expects that the fair financial performance will continue throughout the year due to favorable market conditions like booming demand for memory chips and OLED panels.

It also expects that the new 64-layer 3D NAND flash chip production in Pyeongtaek facility will help expanding its presence in the market.

The introduction of next flagship smartphone Galaxy Note 8 is also gathering interest whether it will help the Korean electronics mobile business to completely recover from the slump.

Meanwhile, Samsung reported that it has collectively spent 22.5trillion won for memory chip and display production facility establishment in the first-half of 2017.

 

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