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Samsung Rides Chip Sales, Galaxy S8 To Record Profit

Samsung has recovered nicely from last year’s phone debacle.

The company reported a record profit of about $12.6 billion in the second quarter, with its mobile business ringing up $3.64 billion in operating profit on the strength of continued sales of its flagship Galaxy S8 and S8+ smartphones.

Samsung said the “Galaxy S8 and S8+ have outsold the Galaxy S7 series in almost all regions” and the Galaxy S8+ accounted for more than half of S8 sales.

Despite the strong sales performance of premium smartphones, Samsung’s total smartphone shipments remained at a similar level quarter-on-quarter, due to decreased sales of mid- to low-end products.

Samsung expects demand for smartphones and tablets to increase as the market enters a period of strong seasonality. However, competition is anticipated to intensify as new smartphone models are released by competitors. In response, Samsung will launch a new Galaxy Note with enhanced performance and features, to maintain the strong sales momentum.

Looking ahead, the company said it will be “putting customer safety first and foremost.” In particular, Samsung “will foster differentiated services by creating an open ecosystem that promotes full connectivity between key services such as Samsung Pay, Samsung Cloud, Bixby, and other third-party services, while enhancing connected services among its various product categories.”

The majority of the company’s quarterly profit came from its component and chip business, which remains strong. Chip sales more than tripled from the same period a year earlier to a record $7.2 billion. Continued demand for DRAM and NAND chips and supply constraints are likely to sustain profit margins for the foreseeable future, Samsung said.