Samsung's dominant position in the memory chip market has allowed the company to make money hand over fist for the past couple of years. Rising memory chip prices have also increased its profit margins which is why the company is expected to forecast an almost 50 percent increase in quarterly profit for Q1 2018 on Friday. Analysts feel that the rally in the memory chip market will help Samsung cover the slowdown in sales of smartphones and other related components.
Samsung's quarterly profit
Samsung reported an operating profit of $8.7 billion in Q1 2017 and it happened to be the company's second-best quarterly result ever. It also represented the highest-ever operating profit for the January to March period. Even back then, the company said that despite a slowdown in mobile sales it had a great quarter due to increased sales for memory chip products.
Financial analysts polled by Thomson Reuters predict that Samsung is going to forecast a jump of almost 50 percent in operating profit on Friday. They expect that the semiconductor business will account for almost three-quarters of its $13.7 billion operating profit for Q1 2018. Some analysts even predict that Samsung will rake in 70 cents in operating profit for every $1 of DRAM chips sold.
Samsung's stellar performance in the memory chip market has enabled it to firmly dethrone Intel as the world's largest semiconductor vendor after 24 years. However, some analysts feel that Intel could take back its lead if memory chip prices fall in the coming year, something they expect to happen as Chinese manufacturers gear up to enter the lucrative market. Unlike Intel, Samsung's lead isn't built on microprocessors, which are largely non-volatile when it comes to pricing.
The company is due to issue its earnings guidance for the first quarter of the year on Friday before it reports the full results later this month. The Galaxy S9 is expected to have a considerable on-year impact on Q1 2018 profitability given that it was released almost a month before the Galaxy S8 was last year.
