Samsung is powering toward record profits thanks in part to Apple’s new iPhones.
The two tech companies are friends as much as they are foes. Samsung provides key parts for Apples (AAPL) devices
Samsung said Friday it expects to record what amounts to a 20% Y-o-Y increase in earnings with a $17.6 trillion operating profits in its third quarter when compared to last year’s earnings in the same period.
Analysts have moved to explain the record high in earnings as being likely driven by strong sales in memory chips and higher earnings in Samsung’s display and consumer electronics business, according to SK Kim, an analyst with investment bank Daiwa Capital Markets.
The higher margins for flexible screens Samsung is supplying for the new range of iPhones helped boost earnings, Kim said.
This is the highest third-quarter earning ever in Samsungs’ history and there are lingering doubts about how long Samsung’s profits can keep hitting new highs.
Analysts have been warning about slowing demand and a subsequent drop in prices for some memory chips, the business that drove a year-long streak of record profits at Samsung.
And despite the blockbuster earnings Samsung forecast Friday, analysts expect the company to report disappointing smartphone sales for the third quarter, despite the release of a new flagship device, the Note 9, in August.
Samsung, the world’s largest smartphone maker, will report full results by October end
Analysts also believe that the heat in South Korea this summer drove high sales of its air conditioners; another possible reason for posting such high earnings beyond smartphone and chip sales
Samsung shares posted slight gains in early afternoon trading in Seoul on Friday. The stock has fallen about 12% so far this year, weighed down by concerns about future demand for memory chips.