Another Earnings Surprise
Such a positive expectation is because Samsung Electronics’ R&D investment is bearing fruit. The company has invested about 8% of its annual sales in R&D in order to outperform the others in the fields including 3D NAND flash, OLED and many more with its innovative technology. “The global semiconductor industry is showing a downturn with the global demand on the decline, but Samsung Electronics is maintaining its cost competitiveness by means of its technology at least two years ahead of the others in the industry,” said an industry expert, adding, “In the DRAM segment, the profit ratio gap between Samsung Electronics and the others has widened to more than 20% as of late.”
Samsung Electronics’ semiconductor business unit is expected to record 2.5 trillion won (US$2.17 billion) in operating profit in the second quarter of this year alone. The estimate is 4.3 trillion won (US$3.7 billion) for the IT & Mobile (IM) division, 200 billion won (US$173 million) for display and 800 billion won (US$695 million) for consumer electronics. The quarterly operating profit of the IM division, in particular, is predicted to top four trillion won (US$3.47 billion) for the first time in two years, led by the popularity of the Galaxy S7 smartphone that reflects the company’s current strategy to put profitability and efficiency above a drastic change.
Some of the securities companies raised their estimates by 13% to 28% in the past one month. It is being said that the possibility cannot be ruled out that Samsung Electronics’ Q2 operating profit may exceed eight trillion won. At present, IBK Securities’ estimate is 7.8 trillion won (US$6.78 billion), followed by those of Daishin Securities and Hanwha Investment & Securities (7.7 trillion won), Hyundai Securities and HMC Investment & Securities (6.3 trillion won) and Mirae Asset Securities (5.9 trillion won).