Mobile, memory chips and storage sales boost Samsung profits

Mandy Carr
July 27, 2017

Samsung Electronics on Thursday said it expected the memory chip boom to continue in the current quarter, after reporting a record operating profit for the three months through June.

Samsung C&T on Wednesday said in its regulatory filing that it posted 255 billion won ($227.5 million) in operating profit in the second quarter ended June, up 44 percent from the same period past year.

Operating profit was up 72.9 percent from the previous year to 14.07 trillion won, while the firm's overall sales increased 19.7 percent to 61 trillion won. That demand, coupled with a tight supply, has seen the price of memory chips shoot up over the a year ago, bringing an unprecedented level of profitability to suppliers such as Samsung.

"It was a great quarter for Samsung, fueled by sales of the Galaxy S8 smartphone", said Holger Mueller, vice president and principal analyst at Constellation Research Inc.

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The numbers appear to be in line with a report on expected profit they released on July 7.

Samsung is reaping the rewards of dominating in the memory chip market which is growing much faster than the market for computers that rely on processing units dominated by Intel, said Chung Chang Won, a senior analyst at Nomura Securities.

Tight supplies coupled with rock solid demand have pushed prices of memory chips higher, with average selling prices of DRAMs and flash memory chips doubling over the past year, bringing South Korea's memory chip makers record wide profit margins. Apple is forecast to report $8.2 billion in net profits next Tuesday, according to data by FactSet. Samsung has said it plans to spend $18 billion in the next four years to expand memory chip production capacity at its South Korean plants. Trading volume was moderate at 420 million shares worth 5.3 trillion won (US$4.7 billion), with gainers outpacing losers 430 to 356.

SK hynix, a major chipmaker, advanced 2.4 percent to 68,400 won, but Samsung Electronics actually edged down 0.08 percent to end at 2,490,000 won, as investors opted to cash in profits, according to analysts.

Other reports by Guamnewswatch

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