Server market demand pushes Samsung to record profits
Thu 27 Jul 2017
Samsung has released its second quarter earnings, posting record profits and strong growth in most areas of the business.
The world leader in smartphone, TV and memory chip production brought in 61 trillion Korean Won, worth approximately $54 billion, in revenue in the most recent quarter. Profits saw record highs, with operating profit at 14.07 trillion Won, a rise of 42% year on year.
A significant part of this profit is attributed to growth in the sale of high-quality chips, which are selling at higher prices due to increased levels of demand from companies requiring more processing power for cloud computing.
In the official release, Samsung described this trend as ‘tight supply-demand conditions coupled with increased demand from the server market.’
Samsung’s display panel arm also saw improvement quarter on quarter. The company saw increased sales in large, top-end ultra-high-definition (UHD) panels, which increased profitability.
Samsung’s mobile business also appeared to be doing well with a ‘significant increase in earnings quarter on quarter’ as a result of the Galaxy S8 release. However, high component prices led to a slight decline in operating profits. An increase in prices meant that earnings in its TV branch also slowed.
Looking forward, the company is expecting a slower third quarter. While it expects a continuation of good conditions and sales in the semiconductor market, it also warns that overall earnings are likely to slow compared to the previous quarter.
This slowdown is anticipated due to up-front costs involved with the production of a new organic light emitting diode (OLED) production line, as well as a squeeze on liquid crystal display (LCD) price competition.
Additionally, sales of the recently launched Galaxy S8 are forecast to slow, and the company expects to fork out a considerable amount for promoting its new Note device.
One distinct advantage the company has in the mobile sector is its dominance in the smartphone OLED screen market, in which it has a 90% market share. Apple has been tipped to use Samsung’s OLED screen for its next iPhone.