Samsung Electronics is likely to surpass that of Apple’s for the same quarter for the first time ever, as the company is set to record its highest ever quarterly operating profit, analysts said.
The South Korean electronic giant will highlight what it expects to see in terms of revenue and operating profit for the June quarter as it is set to release earnings guidance on Friday.
According to Reuters data, on revenues of 58.79 trillion Korean won, a second quarter operating profit of 13.29 trillion Korean won ($11.5 billion) is set to be recorded by Samsung. an operating profit of $10.49 billion and revenue of $44.9 billion is also expected to be reported by Apple in the same period.
A 63 percent year-on-year increase would be reflected by Samsung’s operating profit if the estimates are correct.
In relation to Apple Inc. this would also be the first time that Samsung has recorded higher quarterly operating profit.
With Jeff Kim of KB Securities suggesting in a note this week that operating profit would reach 13.4 trillion Korean won, some analysts are even more bullish.
As the company has been trying to reduce its reliance on mobile and build up in other areas, Samsung’s semiconductor business is booming, even though Samsung has traditionally been known for its strength in the smartphone market.
Semiconductors are likely to contribute 60 percent of the company’s operating profit in the second quarter, making it the largest division, said Neil Campling, head of technology, media, and telecoms research at Northern Trust Capital Markets.
In order to boost its lead in the market, Samsung announced plans to invest $18 billion in South Korea in its chip business earlier this week.
Behind the record-high earnings, which are set to be released in full later this month, the semiconductor business is likely to be the key driver.
Marking ahead of analyst estimates for $14.4 billion of revenues for Intel’s entire business, the semiconductor division to pull in 17.5 trillion won or $15.13 billion of revenues, Campling said he expects.
The so-called NAND and DRAM chips, which can be used in devices such as laptops and smartphones, through to data centers, are produced by Samsung and a number of trends are driving the uptake of those chips.
And helping Samsung’s revenue is the increasing prices for these semiconductors. According to KB Securities, with shortages likely to remain in the second half of the year, global DRAM demand is likely to be up 24 percent year-on-year in 2017, outstripping supply, at the same time. This is helping to drive prices higher.
“Figures of demand associated with data centers have not been accurately estimated, but data usage among consumers is surging, while relevant companies are making larger-than-expected server investments for data analysis and application,” Kim said in a note.
For its upcoming anniversary edition iPhone 8, Apple reportedly ordered 70 million OLED panels from Samsung earlier this year. Kim said that Samsung could be helped to see record high earnings in the display division of the business by the increased price rises in OLED panels as well as increased demand from the likes of Apple.
(Adapted from CNBC)