Samsung makes record earnings from chips

Never mind the fact that one of your flagship products caught fire and your Vice Chairman is in jail, Samsung is still winning.

Record earnings at Samsung Electronics chip division are set to propel the tech giant’s first-quarter profit to a three and a half year high, and the quarters ahead could be even better if its newest smartphone, Galaxy S8, is a success.

A boom in memory chips spurred by demand from smartphones and servers has helped Samsung tide over the costly failure last year of its Galaxy Note 7 smartphone and management turmoil.

Vice Chairman Jay Y. Lee is on trial for bribery and other charges linked to a corruption scandal that led to the ouster and arrest of South Korean President Park Geun-hye.

Shares of Samsung, Asia’s biggest company by market capitalization and the world’s largest memory chip maker, are near record highs after gaining nearly 17 percent so far this year, on top of the 43 percent surge in 2016.

Wall Street has on average estimated Samsung’s January to March operating profit to have risen 41 percent from a year earlier to $8.44 billion.  This is the highest profit since the best ever profit clocked in the third quarter of 2013.

And as Samsung prepares to start selling its revamped Galaxy S8 from April 21, the average forecast from the same survey tips Samsung to report a record 11.9 trillion won profit in the second quarter.

Analysts expect tight supply conditions for memory chips to continue this year, particularly in NAND flash chips used for long-term data storage, keeping Samsung’s margins padded. That leaves the mobile division as the key earnings variable, they said.

Some analysts and Samsung’s head of smartphone business expect the phone’s first year sales to beat that of predecessor S7, setting a new record for the South Korean company.