Expectations are growing that Samsung Electronics Co., South Korea’s tech giant, would continue to enjoy a boost in its business in the second half of 2016 after the company on Thursday surprised the market by reporting better-than-expected earnings with a robust operating profit of 8.1 trillion won ($7 billion) for the second quarter this year that beat earlier market consensus of 7.4 trillion won and its 6.7 trillion won income in the previous quarter.

According to various market estimates, Samsung Electronics is expected to raise over 7 trillion won in operating profit in the July-September period, mainly driven by strong performance of its semiconductor, display and consumer electronics divisions. But it will likely see a slight drop in profit from its mobile business that had propelled the overall growth in the first half, according to market analysts.

As the global smartphone giant Apple Inc. and Chinese rivals are gearing up to take the lead in the smartphone market with their new phones in the second half, Samsung Electronics that already introduced its new flagship smartphone Galaxy S7 series in March that helped bolster sales and profit of the company’s information technology and mobile communications (IM) division in the first six months of the year will likely see a sales drop in its high-priced mobile devices such as the Galaxy S7 Edge.

Market analysts also expect that Samsung Electronics’ marketing cost should increase significantly for the upcoming Summer Olympics in Rio de Janeiro from Aug. 5 to 21, one of the world’s largest sports events that give a great chance for global companies to promote their latest products and technology to worldwide viewers. Analysts estimate Samsung Electronics’ IM division to raise an operating profit in the mid- to- high 3 trillion won range versus more than 4 trillion won profit expected from the division in the second quarter.

However, Samsung Electronics’ other businesses, in particular semiconductor sector, are expected to more than offset the likely fall in profit from the IM division in the latter half of this year. According to various market sources, profit in the company’s semiconductor division is expected to improve in the third quarter, led by a recent rebound in the price of dynamic random access memory (DRAM) that had fallen for almost two years.

According to semiconductor market tracker DRAMeXchange, the price of 4-gigabyte DDR3, which is the basis for the average contract price (ACP), started to pick up in June after a long downfall since Oct. 2014. DRAMeXchange forecast that the DRAM price would increase by between 4 and 8 percent in the third quarter on growing demand for mobile and server chips.

Sales of NAND flash memory chips are also projected to rise in the second half, boosted by an increase in demand for high-priced products such as corporate-use solid-state drives (SSD). Song Myung-sup, an analyst at Hi Investment & Securities Co., said that Samsung Electronics is expected to raise 3.3 trillion won worth of operating profit in the semiconductor sector during the July- September period.

Profitability in the tech company’s display sector is also expected to improve in the third quarter, mainly led by an increase in sales of small- and mid-size organic light-emitting diode (OLED) panels. Samsung Electronics will also likely see a gain in earnings in TV and consumer electronics sector.

Kim Kyung-min, an analyst at Daishin Securities Co., said that Samsung Electronics’ operating profit in display and consumer electronics divisions is expected to continue to rise as it has successfully solidified its market leading position by widening the technology gap with its competitors by more than two years in the component sector including OLED and 3D NAND.

By Noh Hyun

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