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With Record Second-Quarter Earnings, Samsung On Track To Take Intel's Chip Crown


07/05/2017


With Record Second-Quarter Earnings, Samsung On Track To Take Intel's Chip Crown
With soaring memory chip sales pushing it past Intel Corp as the biggest semiconductor maker by revenue for the first time. Samsung Electronics Co Ltd is expected to report its best-ever quarterly profit in the second quarter.
 
The chip industry has seen a super-cycle amid limited supply growth fueled by soaring demand for processing firepower on smartphones and servers, and the world's largest memory chip maker is the among the biggest beneficiaries of that soaring demand.
 
As it seeks to extend its lead in memory chips and next-generation displays for smartphones, it plans to invest some $18.6 billion in South Korea, Samsung said on Tuesday underscoring its dominant position.
 
For the first time since 1991, now poised to knock Intel off the top of the global semiconductor market-share rankings is the South Korean tech giant which is also Asia's third-largest company by market capitalization.
 
"From the second quarter, Samsung will become No. 1 in market share due to the recent increase in data centers and demand for solid-state drives," NH Investment & Securities analyst Peter Lee wrote in a note to clients.
 
According to the average forecast from a Thomson Reuters survey of 18 analysts, a new high is likely to be created as it is expected that Samsung's April-June operating profit would leap by 67 percent from a year earlier to reach 13.1 trillion won ($11.4 billion).
 
Expectations are that July-September profit will be even higher at 13.8 trillion won, according to the same survey.
 
Keeping the firm ahead of rival Apple Inc as the world's top smartphone maker, solid sales of the Galaxy S8 smartphone launched in April likely provided an additional boost.
 
Last year, the costly withdrawal of Samsung's premium Galaxy Note 7 due to fire-prone batteries, has shaken the nerves of investors and the S8's performance has reassured such investors and their uneasiness.
 
On Tuesday, the value of Samsung shares in trading were at a near-record high of 2.35 million won. On top of a 43 percent surge in 2016, they have gained 30 percent so far this year.
 
"The Galaxy S8 series has been out for more than 2 months now and we see similar traction as the Galaxy S7 series," Counterpoint analyst Tom Kang said.
 
He said that in line with first-year sales of the Galaxy S7, Samsung would sell about 49 million S8s by the end of its first full-year release.
 
And after the interruption of the Note 7 debacle, the company's schedule of market-moving gadget releases is most likely to be restored as Samsung is also preparing to unveil the Galaxy Note 8 in August, reported the media quoting sources.
 
The company will not disclose details on its performance until late July but will issue earnings guidance early on Friday.
 
Due to limited supply and strong demand driven by servers, DRAM chip prices will continue to rise in the second half of 2017, Nomura has predicted.
 
It said that despite an easing of a production bottleneck, profits for producers of NAND semiconductors would be maintained by demand for solid-state drives (SSD) and smartphones.
 
(Source:www.reuters.com)