​Samsung mobile profit continues its rise for Q2

Samsung Electronics' mobile division contributed 4.32 trillion won ($3.82 billion) out of its two-year high 8.14 trillion won ($7.23 billion) operating profit for the second quarter, and it hopes to continue its streak with the upcoming Galaxy Note 7.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Electronics saw its second quarter profit rise 18 percent from a year ago to 8.14 trillion won ($7.23 billion), continuing its high of the first quarter thanks to a return to form of its mobile division.

The mobile division posted operating profits of 4.32 trillion won ($3.82 billion), higher than its two year-high of 3.89 trillion won of the previous quarter, thanks to strong sales of the flagship Galaxy S7 and S7 Edge.

The pricier Edge model accounted for over 50 percent of the S7 series and profitability of mid-tier models such as the Galaxy A and J remained similar to the previous quarter, Samsung said, which helped improve profits.

Demand for smartphones and tablets in the second half will rise, but the competition will also become fiercer, the company added.

Unlike in the first half where the S7 series had no level challenger, Apple is expected to launch its next iPhone in September, clashing directly will the upcoming Galaxy Note 4, which may divide consumers. Chinese vendors are also to launch new phones in their home country that will challenge the Korean firm there.

Samsung said it expects to increase shipment in the next quarter but profitability will be affected by higher marketing costs due to fiercer competition. Strong sales of its flagship models and the launch of its China-only Galaxy C model will increase shipment, the company said.

The company is expected to launch the dual-edged Galaxy Note 7 next month, which, according to mobile boss DJ Koh, also has improved software.

The mobile division's network business saw its LTE business profit rise, and it expects to win more orders in the third quarter, the company said. Samsung recently rolled out a IoT-dedicated network with compatriot SK Telecom in South Korea.

Samsung said it also invested 4.2 trillion won facilities: 2 trillion won for semiconductors and 1.6 trillion won for displays. A total of 8.8 trillion won for the first half was spent. The company said it expects the year's total to increase slightly year-on-year. It also expects demand for its small-sized OLED and V-NAND solid-state drives (SDD) to see a huge increase next year.

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.

For this year, it expects flexible OLED demand will increase, which it supplies to its own Note 7's dual-edge, as well as Chinese buyers.

The semiconductor division posted operating profits of 2.64 trillion won, a decline from last year's 3.87 trillion won but an increase from previous quarter's 2.33 trillion won.

Despite the year-on-year fall, the profit is relatively high compared to rivals SK Hynix and Micron, as DRAM prices are negatively affected by declining computing demand.

Samsung said rising demand from mobile and SSDs and cost cutting helped the "solid profits". Expanding supply of 48-stack V-NAND and NANDs for high-capacity SSD and servers led the growth.

Profits will continue to increase in the second half, it said, backed by higher density NANDs and its "mature" 20-nanometer DRAMs.

For processors, demand for 14-nanoameter mobile application processors increased as well as image sensors.

Samsung will continue to diversify its client portfolio, it said. It clinched back Qualcomm as a client and has been winning more Chinese clients in recent years.

Its consumer electronics division posted a surprise operating profit of 1.03 trillion won -- over double that of last year's 510 billion won -- despite lowered demand for premium TVs in developed markets such as Europe and the US.

The upcoming Olympic Games in Brazil likely helped, as well as its improved yield rate for quantum dot LCD TVs.

Samsung Pay, the firm's mobile payment service, was recently launched in the Latin America country ahead of the Games.

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