Samsung posts record-high profit, sales
S. Korea giant ends Intel’s reign in microchip
SEOUL, South Korea, July 29, (AP): Intel’s more than two decade reign as king of the silicon-based semiconductor ended Thursday when Samsung Electronics surpassed the US manufacturer to become the leading maker of the computer chips that are a 21st century staple much as oil was in the past.
Samsung reported record-high profit and sales in its earnings report for the April-June quarter, and while Intel’s reported earnings beat forecasts, the US company’s entire revenue was smaller than sales from Samsung’s chip division.
Samsung said its semiconductor business recorded 8 trillion ($7.2 billion) in operating income on revenue of 17.6 trillion won ($15.8 billion) in the quarter.
Intel said it earned $2.8 billion on sales of $14.8 billion. Analysts had expected the US chipmaker to report $14.4 billion in quarterly revenue.
“Given Samsung’s strength today in flash memory, I am not surprised Samsung surpassed Intel in semiconductor revenue,” said Patrick Moorhead, principal analyst with Moor Insights & Strategy, adding that Intel may be able to catch up Samsung when Intel’s memory output is at full production capacity in about six months. “I think we will see a lot of back and forth between the two companies.”
On an annual basis, Samsung’s semiconductor division is widely expected to overtake Intel’s sales this year, analysts at brokerages and market research firms say.
Mobile devices and data are the keys to understanding Samsung’s ascent as the new industry leader, even as its de facto chief is jailed, battling corruption charges, and it recovers from the fiasco last year over the fire-prone Galaxy Note 7 smartphones.
Manufacturers are packing more and more memory storage capacity into ever smaller mobile gadgets, as increased use of mobile applications, connected devices and cloud computing services drive up demand and consequently prices for memory chips, an area dominated by Samsung.
Just as Saudi Arabia dominates in oil output, Samsung leads in manufacturing the high-tech commodity of memory chips, which enable the world to store the data that fuels the digital economy.
“Data is the new crude oil,” said Marcello Ahn, a Seoul, South Koreabased fund manager at Quad Investment Management.
For over a decade, Samsung and Intel each ruled the market in its own category of semiconductor.
Intel, the dominant supplier of the processors that serve as brains for personal computers, has been the world’s largest semiconductor company by revenue since 1992 when it overtook Japan’s NEC.