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Samsung report shows record profits despite ‘slow demand’ for OLED displays

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Another record-breaking profit has been projected by Samsung Electronics for this year’s first quarter after making huge performance in the electronic market last year. Thanks to the rising demand for memory chips even as the market for OLED display panels shrinks.

The world’s biggest smartphones, memory chips and television sets marker indicated a challenge for the second quarter to be a mild demand for smartphone OLED display panels but strong growth in the chip business.

Samsung investors are simply not showing concerns about the shrinking profits in the smartphone market, but ceasing the opportunity provided by memory chips sales. Early this morning, Samsung Electronics shares went up by 2.7%, while KS11, the KOSPI benchmark share price index was 1.3% higher.

Greg Roh, HMC Investment & Securities analyst said: “Shares are rising as Samsung Electronics’ outlook for its memory chip business appears more positive than we’ve heard from other companies.”

“Generating overall earnings growth across the company will be a challenge due to weakness in the display panel segment and a decline in profitability in the mobile business amid rising competition in the high-end segment,” Samsung said in a statement.

On the contrary, the Samsung rival Taiwan Semiconductor Manufacturing Company (TSMC) and SK Hynix Inc recently warned of slower performance in sales of smartphone chip separately. Apple Inc key supplier of chips TSMC last week lowered its revenue target, creating speculations that the newly launched iPhone X is dead.

Reuters reports that Samsung which is a rival and chip supplier to Apple, “forecast continuing strong sales not only of server chips but mobile chips as well.”

Samsung Press Conference

Samsung Press Conference: Samsung Electronics Executive Vice President WonJin Lee addresses the press conference.

Samsung’s memory business senior vice president, Sewon Chun, said the demand for mobile NAND and DRAM chips would be strengthened by this year’s trend towards bigger storage capacity and more processing power offering “high-density” chips. This is as a result of new apps requiring such facilities such as virtual reality gaming.

A $14.4 billion (15.6 trillion won) operating profit was reported by Samsung Electronics in the first quarter, which coincides with the company’s estimation and 58% increase from last year’s record.

Samsung’s chip market fortune

From the company’s financial reports, chip business recorded its top profit, making a record of $10.7 billion (11.6 trillion won) operating profit between January and March, from its $10.1 billion in the previous quarter, regardless of the latest shrink in memory chip market.

Samsung gained a potential advantage in the U.S. chip market after the United States banned its companies from doing business with Chinese telecoms Equipment Company and mobile phone manufacturer ZTE Corp.

According to Reuter, when Ben Hur, Samsung’s System LSI business vice president was asked by analysts if ZTE’s ban from business in the US would help its company’s chip sales in China, he said: “Samsung would actively respond to new clients.” Samsung said its mobile business booked 82% increase from last year’s records.

Meanwhile, GfK market research says that global smartphone demand has suffered a 2% decrease between January and March, with demand mostly slower in North America and China.

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