Samsung Electronics’ first-quarter profit is expected to set a three and a half year record high as the chip division of the Korean conglomerate sets record profits. Samsung, despite facing management troubles and the Galaxy Note 7 fiasco, is expected to see operating profit gains of around 41 percent for the period of January-March this year compared to the same period last year, which amounts to 9.4 trillion won or $8.44 billion. The majority of the company profit came from its chip division, which earned around $5.2 billion. Record profits of Samsung’s chip division came from increased profit margins originating from the tight supply of memory chips, especially NAND chips used in long-term storage of data. Analysts expect profit margins of memory chips to remain high throughout the year as memory chip supplies remain tight, benefitting Samsung, world’s largest memory chip manufacturer.
Aside from memory chips, analysts expect Galaxy S8 and Galaxy S8 Plus to become a major factor in Samsung’s success this year. If the flagship smartphones from Samsung become a success, the company may see record profits of 11.9 trillion won ($10.5 billion) in the second quarter. Just last year, Samsung Electronics’ smartphone division took a big hit due to the Galaxy Note 7 fiasco, which resulted to Samsung losing its dominance in the smartphone market as it slid to second place behind Apple in the fourth quarter of 2017. To regain this lead and increase Samsung’s market share, Galaxy S8, and its larger brother Galaxy S8 Plus, should be a success, something that an analyst from Counterpoint expects to happen.
All the good news for Samsung comes after the scandals it had weathered these past few months, which included the Galaxy Note 7 fiasco and the corruption scandal with former South Korean President Park Geun-Hye. Samsung Electronics lost around $6 billion dollars due to the recall of Galaxy Note 7. Later on, it was discovered that problems related to the construction of the battery caused the explosions of the device. Another trouble Samsung faced is the corruption scandal involving Samsung’s Vice-Chairperson Jay Y. Lee, who is currently on trial for bribery, embezzlement, and perjury. Lee’s arrest came after the investigation of Korean prosecutors found evidence of Samsung officials bribing former South Korean President Park. Bribes were given to Choi Soon-Sil, a close associate of the former president, in exchange of convincing the National Pension Service to agree with the merger of Samsung C&T and Cheil Industries in 2015.