Samsung predicts another record quarter, thanks to its chip business
A first quarter profit of 15.6 trillion won is expectedBy Rob Thubron
Samsung has released its earnings guidance for the first quarter of 2018, and it's another record for the company. The firm expects operating profits of 15.6 trillion won (around $14.6 billion), marking a 57.6 percent increase from the same period last year.
According to Bloomberg, Samsung's profit estimates beat analysts' predictions of 14.5 trillion won. Q1 2018 sales also grew, rising 18.7 percent YoY to 60 trillion won, but that's lower than the previous quarter's 66 trillion won.
The figures include sales of the flagship Galaxy S9 and S9 Plus handsets, but most of the money---around 11 trillion won---came from Samsung's chip business. The company became the world's biggest chipmaker in Q4 last year, knocking Intel off the top spot for the first time since 1992. Continuing demand for its chips used in servers and smartphones have kept Samsung in record profit, easing concerns about its display business suffering from disappointing iPhone X sales---the Korean company provides the OLED displays for Apple's flagship.
But it wasn't all good news for Samsung; its shares fell 1 percent, and are down 5 percent this year after climbing 47 percent in 2017. Analysts are expecting similar or lower profits in the second quarter, a result of slower growth in DRAM chip prices and increased marketing costs for the Galaxy S9 handsets.
Despite the falling shares and slowing memory chip prices, Samsung is still expected to reach record annual earnings in 2018. "Although gains in memory chip prices have slowed from the height of the chip boom, lower prices could also increase demand for chips, and Samsung has the cost-cutting ability to keep profits up," Greg Roh, an analyst at HMC Investment & Securities, told Reuters.