South Korean technology giant Samsung Electronics is flying. In earnings guidance released earlier today, the company projected an 18.7% increase in sales for the first three months of this year, to about 60 trillion Korean won ($46.5 billion). Operating profits are expected to soar 57.6%, to around KRW15.6 trillion ($11.8 billion).
For all its hi-tech gadgetry, it is Samsung's less dazzling memory chips business that is delivering most of the current growth. Analysts reportedly think memory accounts for about three quarters of operating profits and expect Samsung Electronics Co. Ltd. (Korea: SEC) to continue benefiting from its strong market position throughout 2018.
While sales of display panels remain weak, the recently launched Galaxy S9 smartphone appears to have met a positive reception from consumers, boosting revenues at Samsung's handset division in the first quarter.
But the outlook could be very different next year. Analysts are predicting a slowdown in the memory market in 2019, and say that major customers, including iPhone maker Apple Inc. (Nasdaq: AAPL) and social network giant Facebook , may cut spending on RAM (random access memory) equipment.
Conditions in the smartphone market could also get tougher. Market watchers at this year's Mobile World Congress expressed disappointment with the perceived lack of innovation in the smartphone sector. Many of the latest models, including Apple's eye-wateringly expensive iPhone 10, seem to be incremental improvements to older versions rather than anything truly visionary. In future, that could persuade customers to cling to their existing handsets for longer. (See Overpriced & Underwhelming, Apple's New iPhone Lacks X Factor.)
Despite the company's strong performance, Samsung's share price has lost 5% of its value on the Korean Stock Exchange since the start of the year as analysts fret about the looming slowdown in major markets.
— Iain Morris, News Editor, Light Reading