Samsung Electronics announced its second-quarter results in 2017. Its net profit for the first time exceeded Apple for the first time. The semiconductor (chip) and OLED panel businesses were the biggest contributors to Samsung Electronics’ net profit. Let's take a look at the relevant content.
From April to June 2017, Samsung Electronics' revenue was 61 trillion won (about 54.819 billion US dollars), up 19.7% year-on-year; operating profit reached a record 14.07 trillion won (about 12.644 billion US dollars), an increase of 72.9%; The net profit was 11.05 trillion won, which also set a new record.
Semiconductor revenue growth of over 40%In terms of sub-business, in the second quarter of 2017, sales of Samsung Electronics' consumer electronics division (color TV, white goods business) was 10.92 trillion won (US$9.813 billion), down 1.1% from the same period of the previous year; operating profit was 0.32 trillion won (about 288 million US dollars), down 68% year-on-year.
Sales of IT and mobile communications reached US$26.969 billion, up 13% year-on-year; sales in the semiconductor sector were US$15.799 billion, up 46.5% year-on-year, operating profit was US$7.216 billion, up 204.2% year-on-year; display panel sales were US$6.929 billion, up year-on-year 20.1%; equipment solutions division sales of 22.691 billion US dollars, an increase of 37%.
Samsung's mobile phone business contributed the most revenue, while the semiconductor and device solutions business contributed the most profit, and the panel business saw the largest increase in profits.
Samsung Electronics said that the semiconductor business has seen a sharp increase in profit under tight supply conditions, mainly benefiting from the strong demand for high-density memory and solid-state hard drives. The system semiconductor business has added mobile processors and sensors/'target='_blank'> image sensors. Sales.
For the display panel business, the profitability of the OLED panel business increased because of the increase in sales of flexible panels for high-end smartphones; the increased profitability of LCD panels was mainly due to the increase in sales of high-end, large-size UHD (Ultra HD) panels.
The revenue of mobile services has increased significantly from the previous quarter, benefiting from the global promotion of smartphones Galaxy S8 and S8+. However, operating profit margins declined slightly due to increased component costs. The decline in TV business revenue was due to increased panel costs and a slowdown in demand in Europe and China. In the home appliance business, continued B2B investment led to a year-on-year decline in revenue.
The Harman audio business, which has been acquired by Samsung, had sales revenue of US$1.9 billion in the second quarter of 2017 and operating profit of approximately US$200 million. However, as the cost of acquisitions increases, the net profit is approximately $5 million. Samsung expects that these costs will continue to affect Harman's performance in the coming quarters, with an average of $100 million per quarter.
Surpass Apple by upstream componentsLi Yaqin, deputy general manager of Qunzhi Consulting, told the “First Financial Daily†reporter that Samsung Electronics’ revenue has always been larger than Apple’s. In recent years, with the joint promotion of semiconductors, OLED panels, LCD panels and other businesses, Samsung Electronics' profitability has improved significantly, and its net profit has begun to surpass that of Apple.
Samsung Electronics is currently the world's largest supplier of chips and OLED panels. It can be said that Samsung Electronics relies on the growth of upstream chip and panel business to achieve a single quarterly net profit surpassing Apple.
Specifically, from the perspective of the semiconductor business, benefiting from the improvement in the demand for solid-state hard disks and the transfer of some wafers, the supply and demand of DRAM (memory) and NAND Flash (flash memory) are tightening, and prices continue to rise. As the performance of smartphones increases, the demand for DRAM and sensors continues to grow. Although semiconductor manufacturers such as Samsung and Hynix began to increase capital investment for expansion, Yuanshui could not save the thirst. It is expected that this tight supply and demand will continue into the second half of the year.
In the second quarter of 2017, Samsung Electronics split its foundry business and independence from the LSI (system semiconductor) business. It will strengthen its flexible business capabilities, expand its foundry business in the open market, and strive for foundry. client.
From the perspective of OLED display panels, due to the strong demand for flexible OLED panels, and Samsung's 98% market share, coupled with the improvement in its yield and scale, revenue and profits will continue to grow. Sigmaintell predicts that "Samsung flexible OLED panel capacity will double in the next year."
However, in the case of rigid OLEDs, there is competition from LTPS LCDs (low temperature polysilicon liquid crystal panels), and prices and profits will be affected depending on the peak season.
In the second half of the year, due to the arrival of demand in the peak season, Apple, OPPO, vivo, Huawei's flagship smartphones will use OLED panels, Sigmaintell predicts that the global OLED market will be tight in the second half of the year, which will be the second half of Samsung Electronics' revenue. And profit growth will have a positive effect. Since the third quarter, Sigmaintell expects the global large-size LCD panel market to usher in a destocking stage. In particular, the TV panel market is oversupply and prices are starting to decline. It is expected that the profit of Samsung's LCD industry will decline in the second half of the year.
After the old production line was shut down, the size of Samsung LCD continued to shrink, and its competitiveness turned to large-size and curved LCD panels. The impact of strategic customer demand adjustment will be relatively large, which is another risk.
From the point of view of terminal products, the growth of Samsung's mobile phone business is mainly due to the hot sale of the S8 series. The S8 is the world's first mobile phone with flexible full-screen, and its technological innovation has strong advantages. Sigmaintell expects Samsung's mobile phone demand for flexible full-screens to reach 70 million in 2017, far higher than other brands' demand. However, the shortcoming is that Samsung's low-end products are not competitive enough. In emerging markets, they face fierce competition from Chinese brands such as Xiaomi and OPPO, and their market share is declining. Therefore, Samsung needs to actively enhance the competitiveness of low-end products to ensure market share.
Samsung’s TV business was affected by the rapid growth of panel costs, and it is clear that its profit in the first half of the year has dropped significantly. With the decline in panel prices in the third quarter, it is expected that the profitability of TV business will improve in the second half of the year.
Looking forward to the third quarter, Samsung Electronics said that due to lower profits from display panels and mobile services, the company's overall profit in the third quarter of 2017 is expected to decline slightly.
It is noteworthy that Samsung Electronics has increased its investment in chips and flexible OLED panels. Samsung’s capital expenditure in the second quarter of 2017 was 12.7 trillion won, including 7.5 trillion won in semiconductor business and 4.5 in display panel business. Trillion won. Demand for global chips and flexible OLED panels is strong, which will help Samsung Electronics maintain its profit growth.
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