Samsung profit rises on new smartphone technology
Six months after it warned that 2016 would be a tough year, Samsung Electronics is showing that new technology and new phones are beginning to pay off.
The South Korean technology conglomerate said on Thursday that its operating profit for the three months that ended in June rose 17 per cent over the same period a year ago. The jump in growth beat analysts' expectations and led to the company's best quarterly profit figure in two years.
At the heart of the recovery is the sustained popularity of Samsung's flagship S7 phone, which analysts say has sold well despite the competitive pressures from Apple. Bolstering that success are steady sales of the company's lower-end phones.
If Samsung's profit growth in the first half of 2016 comes from weathering difficult conditions in the global smartphone markets, analysts say the rest of the year will be more dependent on its lesser-known products: memory components and screen technology.
A potential slump in smartphone sales in the third quarter could be "offset by improving earnings of the semiconductor division and Samsung Display," according to a report from Shinhan Investment Corporation, a Korean securities brokerage. Samsung said that operating profit would be 8.1 trillion won, or about $7 billion, in the second quarter, compared with 6.9 trillion won a year earlier.
The numbers released on Thursday were preliminary; Samsung will post its final earnings later this month. Samsung's new screen technology - which uses what are called organic light-emitting diodes, or Oledss - in its own smartphones has given it a production advantage. Samsung uses that technology, which is more efficient and creates thinner and more flexible screens, to give its Galaxy S7 Edge phones curved edges that create the impression that the screen drops off the side of the device. Read More
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