Samsung Profit and Sales Top Estimates on Chips and S8 Smartphone

Samsung Profit and Sales Top Estimates on Chips and S8 Smartphone

Samsung’s quarterly profit and revenue topped analysts’ estimates, fueled by the success of its new Galaxy S8 smartphones and demand for semiconductors, according to Bloomberg. Net income rose to a record 10.8 trillion won ($9.6 billion) in the three months ended June. Sales rose 20 percent to 61 trillion won.

The results come at a critical time with the trial of billionaire heir apparent Jay Y. Lee winding down to its final proceedings in a scandal that has kept the vice chairman away from Samsung for half a year. In his absence the company has released the S8 to glowing reviews, helping it recover from the Note 7 recall, while also boosting investment in chips to meet demand from.

“The S8 has indeed helped get Samsung back onto its feet, hopefully putting the Note7 debacle behind it,“ Bryan Ma, a technology industry analyst at IDC, said before the announcement. “But we also have to keep in mind that a lot of Samsung’s momentum is from memory and displays too, so it’s not all about the S8, either.“

Sales of high-end chips sought by enterprises helped make up for a seasonal slowdown in smartphone memory demand, Samsung said. The company has ridden out cyclical downturns before, and expects to increase spending this year as well “by a large margin,“ it said. Demand for chips is coming from companies such as Amazon, Facebook and Alibaba, according to Claire Kim, an analyst at Daishin Securities.

Samsung has also rallied on a shortage of memory chips this year. Prices of DDR3 4-gigabyte DRAM chips rose to $3.12 at the end of June, up from $2.98 at the end of March and nearly double from a year earlier, according to data fromInSpectrum. Samsung’s chips unit reported operating profit of 8 trillion won while the display business had earnings of 1.7 trillion won.

The mobile business reported operating profit of 4.1 trillion won. Samsung said sales of lower-priced phones sagged even though the flagship S8, released in March, accounted for more half of its mobile growth. Total operating profit for the second quarter was 14.1 trillion won.