Samsung Predicts Record Q2 Profit Amid Strong Chip Demand

Posted July 09, 2017

The clearest factor behind Samsung's strong showing is the uptick in semiconductor prices amid brisk demand for smartphone and server chips.

After the announcement of their revenues for the second quarter of this year, Samsung is expected to become the second largest producer of Semiconductors in the world pushing down Intel Corp which enjoyed the position for a good long time.

Samsung has been having a roller coaster ride lately - the company suffered a huge loss in the third quarter of a year ago, but bounced back the next quarter.

The South Korean company also said it expected consolidated sales to approximate about 60 trillion won for the same period, climbing 17.78 percent on-year. The company also would have earned more than the four USA stock bellwethers (Facebook, Amazon, Netflix, and Google) whose combined operating profit in the first quarter was $11.15 billion.

It also beats the 13.1 trillion won ($11.3 billion) projection by Bloomberg analysts.

Samsung last posted its best operating profit in the third quarter of 2013 when it earned 10.2 trillion won.

Samsung shares were down 0.3 percent in early Friday trade, compared with a 0.2 percent fall for the broader market, as the strong earnings outlook was already priced in.

Samsung is doubling down on its silicon success too, announcing earlier this week that it will be investing $18 billion in its chip manufacturing business.

"Samsung's second-quarter estimates have been baked into the market for the past weeks, and investors remained cautious amid increased tension on the Korean Peninsula", said Kim Sung-hwan, an analyst at Bookook Securities. The March launch of its new flagship phone, the Galaxy S8, has also helped. Intel has led the industry in yearly revenue for 26 years, but soaring memory chip sales have allowed Samsung to break that tradition.

The issues with the Galaxy Note 7 wiped out Samsung's third-quarter profit a year ago.