Samsung Electronics Co. said Friday its second-quarter operating profit soared to the highest in its history as huge data growth fueled a boom in the semiconductor sales and helped defy sluggish growth in the smartphone market and a slow recovery in the global economy.
Samsung has a huge presence in Austin, where it employs more than 3,000 workers and has invested more than $19 billion through the years.
In its earnings preview, the South Korea-based tech giant put its April-June operating profit at 14 trillion won ($12.1 billion), up 72 percent from 8.1 trillion won ($7 billion) a year earlier. Sales rose 18 percent to 60 trillion won ($51.9 billion).
The results beat already-high expectations and put Samsung on track to report the highest profit in its history for the full year. Analysts expected 13 trillion won ($11.2 billion) according to financial data provider FactSet.
Other milestones could be waiting. Samsung's quarterly profit could have surpassed Apple's for the first time, and Samsung's semiconductor revenue, which had been second to Intel's, likely surpassed the U.S. company in the second quarter, analysts said.
In the past, Samsung's financial performance mirrored the global economy or the cycles in the consumer electronics industry, such as how often users upgrade their televisions or smartphones.
That is no longer the case. Even as demand for smartphones that had fueled Samsung's profit has slowed, Samsung is on a roll because its memory chips are crucial for global tech companies in the era of explosive growth of data.
"To process and analyze big data, data storage comes first and this is the driving force behind Samsung's record-high profit," Hwang Min-sung, an analyst at Samsung Securities, said in a report. "Consumers' data usage exploded and companies are not saving their money to invest in servers for data storage and data analysis."
Global tech companies like Google, Amazon and Facebook are scurrying to add more servers for their databases to store, analyze and process the massive data generated from connected devices by consumers surfing the internet to stream videos and music, sharing and viewing photos and files online and using mobile applications. With the adoption of artificial intelligence and the arrival of the phenomenon called internet of things where auto vehicles, refrigerators and even mundane objects like toothbrushes can be connected to the internet and churn out data, companies will need even more microchips from Samsung that can handle even more data with speed and energy efficiency.
Analysts believe Samsung's semiconductor division, which makes the DRAM and NAND chips for mobile devices and servers, generated nearly 8 trillion won ($7 billion) during the three-month period, or 60 percent of the quarterly profit.
To put the explosive growth of Samsung's chip profit into perspective, that is close to what Samsung's semiconductor division used to earn for a full year. Its semiconductor division made 8.8 trillion won in operating profit for the full year of 2014.
Samsung is the world's largest supplier of memory chips and retains the most advanced memory chip production technology several years ahead of its rivals.
Analysts forecast Samsung's quarterly semiconductor profit will only rise in upcoming quarters because there are no rivals in sight that can catch up or invest in memory chip production as much as Samsung does.
The company is preparing to expand its chip capacity in South Korea while reviewing whether to add more production lines in China to meet demand. It plans to spend 20.4 trillion won ($18 billion) in the next four years to expand capacities of memory chips in its South Korean plants, it said earlier this week.
Additional material from the Associated Press.
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