Samsung Poised To Pass Apple As Most Profitable Tech Company

Samsung is on the verge of becoming the most profitable technology company on the planet, a distinction that currently belongs to Apple. The South Korean electronics juggernaut tipped the media and investors that it expects to post a record operating profit of 14 trillion won (around $12.1 billion) for the quarter ended June. That would represent a massive 72 percent increase from the same period a year ago, and just as importantly, it would further distance Samsung from the financial fallout of its Galaxy Note 7 recall.

Apple is not likely to be far behind—estimates peg the Cuptertino outfit at reporting an operating profit of $10.6 billion for its latest quarter, according to The Wall Street Journal. And looking ahead, Apple's profit could spike following the launch of its next generation iPhone models, which may include both the iPhone 7s and iPhone 8. If so, that could actually benefit Samsung, even though the two are rivals.

Samsung
Image Source: Flickr (Nan Palmero)

Samsung's record profit is tied more to rising memory prices than it is to smartphone sales. While Samsung has yet to provide financial details on its second quarter performance, the company typically generates about 60 percent of its operating profit from its semiconductor arm. As such, Samsung is benefiting from a jump in memory chip prices spurred by strong demand from mobile phone makers such as Apple, and also the server market.

That is not the only way Samsung stands to reap rewards from Apple's success. It is expected that Samsung will provide flexible OLED displays for at least one version of Apple's upcoming iPhone models. While Apple typically sources components from more than one manufacture, the bulk of orders at the outset are likely to be from Samsung, which is the top dog in mobile OLED display production.

Jousting to be the most profitable tech company really boils down to bragging rights. Even if Samsung concedes the top spot to Apple, this quarter or next, Samsung is a winner in it own right. The company's performance is also an example of why it is important to diversify. Having to recall the Galaxy Note 7 ended up costing Samsung an estimated $5.3 billion, but here we are just a few quarters later talking about Samsung being the most profitable tech firm around.

Thumbnail Image Source: Wikimedia Commons (Hans Olav Lien)

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