Samsung boosts earnings as it faces new iPhone season

Samsung heads into the latter half of 2017 with record quarterly earnings under its belt, hoping to sustain that momentum as Apple prepares to debut the 10th-anniversary iPhone.

Samsung intends to use its well-received Galaxy S8 to extend its lead against its American rival.

But it will also lean heavily on its position as the world’s largest maker of memory chips to grow its bottom line.

The company’s ability to produce not only mobile devices but also some of the most vital parts of a phone, including displays, confers a unique advantage over Apple at a time the global market is losing steam.

The company reported its best-ever operating profit yesterday.

That result, which includes the first full quarter of sales from the S8, underscores how it’s benefiting from higher prices for the memory chips that go into all computing gadgets.

Samsung also happens to be the world’s largest supplier of organic light-emitting diode displays, which may soon become standard.

“Samsung’s dominance in components that matter gives it the upper hand at least through the entire next year. There is only so much either Apple and Samsung can do right now to make their smartphones stand out, unless technology like foldable displays reshapes the market,” said Lee Jae-yun, an analyst at Yuanta Securities Korea.

Samsung may just end up outstripping Apple in profitability in the second quarter. Preliminary operating income rose to $12bn (€10.5bn) in the three months ended June.

Its US rival is projected to post operating income of $10.5bn in the same quarter — a typically weaker period ahead of the release of new iPhones.

While displays and semiconductors have picked up the slack since the Note 7’s recall, the company still gets a significant portion of revenue from smartphones.

It hasn’t divulged Galaxy S8 numbers but reviews for the device, which features a bezel-less display and voice-enabled digital assistant, have been favorable.

Samsung is using the S8 to repair its reputation and regain ground lost to Apple and Chinese rivals from Huawei Technologies to Oppo following the well-publicised demise of the fire-prone Note 7 last year.

It reclaimed its position as the world’s biggest smartphone maker in the first quarter, after losing the lead due to the recall.

It may be benefiting from the usual pre-iPhone lull. Apple is getting ready to unveil possibly the year’s most-anticipated electronic gadget around September or October, an event that typically draws global consumer attention

Bloomberg


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