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Samsung's profit may top Apple's for the first time ever

27 July 2017

On Wednesday, the carmaker said its second-quarter net profit plunged 48 percent on-year on weaker demand from China amid a diplomatic row between Seoul and Beijing over the deployment of a USA missile defense system here.

By division, the home appliance and air solution unit generated 465.7 billion won operating profit, up 7.4 percent on-year, with the revenue coming in at 5.25 trillion won, up 11.7 percent.

Operating profit jumped 73% over a year earlier to 14.1 trillion won while sales rose 20% to 61 trillion won, in line with its earlier guidance.

This strong demand did lead to Samsung paying higher component costs but there was still a large increase in the earnings of its mobile division thanks to the release of the new Galaxy S8 and S8+.

The South Korean tech giant will also benefit from the success of rival smartphone makers.

"We think more than KRW 15 trillion (in third-quarter profit) is more than possible", said analyst Greg Roh at HMC Investment & Securities.

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Samsung has been trying to overcome an embarrassing recall a year ago of its flagship Galaxy Note 7 smartphone over exploding batteries, which cost it billions of dollars and dealt a blow to its reputation.

Samsung's display business, which makes high-end OLED display panels for smartphones and TVs, also saw solid earnings of 1.7 trillion won, while its mobile business reported 4.1 trillion won in operating profit, driven by sales of its Galaxy S8 series.

"The company's strategic model going against Apple Inc's iPhone 8 and Samsung Electronics' Galaxy Note 8 in the second half of 2017 is expected to fall short, making it hard for mobile revenue growth".

Vice Chairman Lee Jae-yong is on trial for bribery and embezzlement linked to the corruption scandal that toppled ex-President Park Geun-hye while his father, Chairman Lee Kun-hee, has been hospitalized since 2014. It said it also expects to see increased orders of memory chips for smartphones with a number of handset manufacturers set to launch new models in the second half of the year.

A court is due to give its verdict on Lee by the end of next month.

Samsung's profit may top Apple's for the first time ever