Samsung predicts record annual profit despite exploding phones and corruption scandal

Samsung has predicted record annual profits just 12 months after it famously recalled all of its Note 7 smartphones after they started to explode on users. The last year has also seen Jay Y. Lee, the head of the Samsung conglomerate, investigated on charges of corruption and bribery. Yet none of that seems to have impacted on the industry and consumer opinion of Samsung as a tech innovator.

In fact, things have never been so good at Samsung (in the accounts department anyway). A memory chip boom that propelled it to record profit in the second quarter is likely to continue in the third, just as revenue is widely expected to benefit from sales of OLED screens to Apple. Samsung is now likely to displace Intel as the leading manufacturer of memory chips and is on course for annual record profits.

"Looking ahead to the third quarter, the company expects favorable semiconductor conditions to continue," a spokesperson for Samsung said. "Although overall earnings may slightly decline quarter-on-quarter as earnings weaken for the display panel and mobile businesses."

In terms of revenue, chips accounted for a record 8 trillion won ($7.20 billion) in the last quarter. Continued demand for DRAM and NAND chips and supply constraints are likely to sustain profit margins for the foreseeable future, Samsung said. Overall, Samsung in a filing said operating profit rose 72.7 per cent to 14.1 trillion won in the second quarter, versus 14 trillion won estimated in July. Revenue rose 19.8 per cent to 61 trillion won, also in line with its earlier estimate.

And this is all while Lee faces difficult questions in court over his questionable behaviour. Lee was arrested in South Korea, for his alleged role in an ongoing political scandal involving impeached President Park Geun-Hye. The heir of the Samsung empire is accused of paying around $38 million in bribes to Park’s long time confidante, Choi Soon-Sil, in order to secure a controversial merger between Samsung C&T and Cheil Industries, which prosecutors say was intended to consolidate control of the country’s largest conglomerate.

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