Samsung is confident that the release of a new large-screen flagship smartphone in the third quarter will help maintain the track record of its smartphone sales.
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The smartphone market overall is still expected to see slower growth overall this year, analysts say.
Indeed, Samsung is set to release the upcoming Galaxy Note 7 on August 2 while Apple’s next iPhone is said to arrive one month later.
In its earning guidance for the April-June period, Samsung expected to post an operating profit of 8.1 trillion won ($7.1 billion) and sales of 50 trillion won. The bigger and more expensive Galaxy S7 Edge made up over half of Galaxy S7 sales, improving profitability for the line-up.
“Samsung’s earnings improved on quarter thanks to strong sales of its flagship Galaxy S7 and S7 edge smartphones”, the company said.
Operating profit for the chips division fell 22 percent to 2.64 trillion won, its lowest since the third quarter of 2014, hurt by broadly weaker chip prices. Revenues generated from the business grew 1.9% on year to KRW26.56 trillion in the second quarter. Operating profit at the mobile unit rose to 4.32 trillion won from 2.76 trillion won. It’s also clear that the bump was driven in no small part by the Galaxy S7 and S7 Edge smartphones. Samsung launched the latest versions of its leading smartphones in March; it is several weeks earlier than it did previous year.
Samsung’s prime rival, Apple, reported a decline of 15% in its iPhone sales in the recent quarter.
Sustained profit gains from the company’s cheaper smartphones, such as the J series, also helped to boost mobile earnings.
Apple and other competitors were not likely to launch any ground-breaking products to undercut Samsung in the second half, IBK’s Kim said.
The high performance of Samsung’s mobile division is showing that its experiment with smartphone designs is paying off.
Samsung introduced the first of its flagship Edge smartphone series, which features curved displays that wrap around two corners of the device. But in 2015, it failed to capture demand because it ran into trouble mass producing those curved displays.
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Although not officially confirmed by the South Korean tech giant, reports claimed it will be increasing OLED panel production to meet demand for Apple’s iPhone next year, adapting the technology for the first time in a future model.
