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Comms chips

Samsung Memory Biz to Fuel Profit Surge

South Korean tech giant Samsung looks set to report a dazzling increase in sales and profits thanks to soaring demand for its memory chips in a range of consumer devices.

Earnings guidance from the company indicates that consolidated sales for the second quarter of 2017 are expected to rise about 17.8%, to approximately 60 trillion South Korean won ($52 billion), compared with the year-earlier quarter.

Consolidated operating profit, meanwhile, is due to grow as much as 73.2%, to KRW14.1 trillion ($12.2 billion), over the same period.

Mainstream media reports suggest the increase puts Samsung Electronics Co. Ltd. (Korea: SEC) on course to overtake Intel Corp. (Nasdaq: INTC) as the world's biggest chip company by revenues this year. For the first time ever, its second-quarter operating profits could also exceed those of iPhone maker Apple Inc. (Nasdaq: AAPL)

Apple has yet to report its own figures but is expected to generate about $10.5 billion in operating income.

Samsung's performance is remarkable given the scandal that has engulfed the organization after vice president Lee Jae-yong -- seen as a future boss of Samsung Corp. -- became implicated in a bribery case involving former South Korean President Park Geun-hye. (See South Korea Seeks Warrant for Samsung Vice Chairman's Arrest.)


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It was also rocked by a crisis at its smartphone business when a number of its flagship Galaxy Note 7 devices were reported to have caught fire during use.

Samsung was forced to recall products and has only just relaunched the device as the Galaxy Note Fan Edition.

The recall proved extremely costly for the South Korean manufacturer but its reputation appears to have suffered minimal damage and it has quickly been able to recover from the setback, judging by today's numbers. (See Samsung's Note 7 Nightmare to Hit Profits Into 2017.)

Samsung provided few details about its performance in today's announcement but analysts believe the company's memory chip business is responsible for most of the recent growth.

Earlier this year Samsung guided for a slowdown in the smartphone sector this year and more competition in the market for display panels. (See Samsung Defies Setbacks, Sees Q1 Profits Surge.)

Besides making semiconductors, smartphones and TVs, it maintains a relatively small network equipment business and -- like other technology giants concerned about the commoditization of hardware -- is now making a push into the market for software and services.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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