Samsung Could Surprise Investors With Q2 2016 Profits

Samsung is the current market leader in the worldwide smartphone industry although the business is not the regional winner in all continents and countries. Indeed, Samsung faces tough competition from competitors such as Apple in the premium smartphone arena, to many Chinese businesses producing great quality Android-powered devices but at a much cheaper price. Samsung released the Galaxy S7 and Galaxy S7 edge in the first quarter, which supported the 2016 Q1 figures. The Galaxy S7 has been a popular handset for Samsung and is expected to support the business going into Q2, where the IT and Mobile division is expected to provide 4.3 trillion won, approximately $3.7 billion.

However, Samsung manufacturer and sell many more electronics products than just smartphones: the business also has a successful semiconductor business, which has a two year technological lead over competitor businesses. As well as the well known Exynos chipset, Samsung also sells memory modules and it's here that the business has been able to use its technological advantage. The company earns more per unit sale in profit terms than the competition and according to an unnamed industry expert, "In the DRAM segment, the profit ratio gap between Samsung Electronics and the others has widened to more than 20% as of late." In other words, Samsung is able to efficiently and inexpensively manufacturer DRAM units and sell them to customers at a profitable price. How great a difference could this make? Samsung's semiconductor business is expected to yield around 2.5 trillion won, almost $2.2 billion, in operating profit for the second quarter, 2016.

The source newspaper is today reporting that Samsung could be set to surprise investors by posting a surprise improvement in earnings, bringing it to over 8 trillion won for Q2 2016 - against expected figures showing expected earnings ranging from 5.9 trillion won up to 7.8 trillion won (approximately $6.8 billion). Given that global demand is slowing or in some industries declining for electronic products, Samsung is using its size and scale of operations to consolidate and effectively squeeze the smaller manufacturers. We will have to wait first for the quarter to close in a few weeks, and then for Samsung to disclose its operating performance: and it's likely that industry analysts will revise their expected earnings and profit figures between now and then.

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About the Author

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.