Owing to an unprecedented rally in the global market for memory chips, Samsung Electronics Co Ltd is set to forecast close to 50% rise in its quarterly profits this Friday. The unforeseen streak should be able to counterbalance the slowdown witnessed in sales of smartphones and other components.
Lee Jae-yun, an analyst at Yuanta Securities Korea, stated that though the memory chip price growth is predicted to see a slow down on account of the boom last year, cost-cutting methods, and increased shipments should provide momentum for the growth in profits for Samsung’s semiconductor business which could result in another profitable record year.
The global memory chip market will be constrained through the year due to disciplined supply which will help Samsung earn record profits even though the growth percent is slowing down to 15%. Last year, Samsung saw a burgeoning profit growth rate of 83%.
According to estimates by an analyst, Samsung could close in about 70 cents in operating profit for every $1 of DRAM chips sold. The earnings from its semiconductor operations will account for close to 3/4th of its overall operating profit amounting to $13.7 billion.
According to a survey of 17 analysts conducted by Thomson Reuters, Samsung, global leader in the semiconductor and smartphone segment, is expected to show a forecast of 46% growth during the period of January to March to 14.5 trillion won operating profit ($13.7 billion). The chip business is expected to project about 10.7 trillion won in operating profit due to a strong demand for DRAM that is currently offsetting the fall in NAND chip prices.
There was also a dip in the forecast of Samsung’s OLED panel shipment that could be attributed to the lower-than-expected sales of the iPhone X which made Apple Inc reduce its purchase of OLED Panels to only 60-65% of the original purchase order plan for the year 2018.