Is Samsung's record-breaking $14.7bn Q1 profit sustainable?

By BizClik Admin

Samsung Electronics released some record-breaking figures this quarter.

It was announced on Friday that Samsung’s revenue will rise by 18.7% in Q1 2018, as the electronics giant releases its figures for the quarter.

Operating profits amounted to $14.7bn, which is a 58% year-on-year increase for the quarter. Sales are said to be up 19% year on year.

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However, celebration was muted among investors with many concerned that the “semiconductor boom”, a key source of profit for Samsung, may be ending. Therefore on Friday shares initially fell about 2.7%, reflecting fears about the sustainability of reported growth. Analysts have said they expect profits to be lower in the second quarter of the year.

While Samsung’s newest flagship smartphone model, the Galaxy S9, has been well received and contributed to profits with 9.3mn units shipped so far, marketing costs for the device were high and, coupled with slower growth in the market for DRAM chips, profits could be set to dip after these impressive numbers.

The company’s Q4 profits last year were largely attributed to sales of new memory chips, while Samsung saw display panel demand decrease, according to the Financial Times. Memory chips make up about 70% of the company’s operating profit, the newspaper reports. 

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