Samsung Electronics overtook Intel as the world's largest chipmaker for the first time ever, thus ending the Santa Clara, California-based tech giant's 24 years of dominance in the industry. The South Korean original equipment manufacturer (OEM) posted its consolidated financial results for the second quarter of the year last week, revealing that its semiconductor unit generated $15.65 billion in sales in the three-month period ending June 30, thus surpassing Intel's performance by more than $890 million. Samsung's chipmaking division posted even more impressive results in terms of profit, recording an income of $7.15 billion, nearly twice as much as Intel did. The U.S. tech giant is unlikely to reclaim its title of the largest chipmaker in the world in the near future, some industry analysts believe, adding that SK Hynix has a better chance of overtaking Intel than Intel has of getting ahead of Samsung again.
Samsung's leading position in the market was largely established due to the mobile industry and the company's dominance in the NAND flash and DRAM segments where it boasts shares of 36.7 and 44 percent, respectively. Its surging profits were mostly prompted by the general demand for flash memory from third-party phone makers and server manufacturers, though some analysts don't see this business as being sustainable in the long-term, describing the current state of the industry as a bubble that's ready to burst in a few years' time. Regardless, the South Korean tech giant continues pursuing its chipmaking ambitions and has just recently opened a new manufacturing facility in Pyeongtaek. The current state of affairs allowed the firm to surpass Intel in the profitability index by 20 percentage points thanks to its operating profit margin of 45.7 percent. Samsung's recent performance is the result of its early investments in the memory semiconductor segment that were approved by Samsung Group Vice Chairman Lee Kun-hee who hasn't been a de facto leader of the company since late 2014 after reportedly suffering a stroke that left him in a vegetative state.
For the time being, the chaebol's chipmaking division is expected to be its main revenue growth engine that's widely expected to lead the company to record annual profits. Samsung's other flagship business is also expected to perform in a strong manner in the coming months after the company launches the highly anticipated Galaxy Note 8 which is expected to be a massive commercial hit.