Samsung's components business has been padding up the company's bottom line for the past few quarters. The company recently reported its earnings guidance for the third quarter this year. According to market estimates, Samsung's Q3 2017 profits have largely been contributed by its components business.
As per the company's earnings guidance, it expects to post an operating profit of $12.9 billion on revenue of $55 billion. It would be the company's second straight quarter in which it posts record profits. Samsung was the world's most profitable tech company in the previous quarter.
Samsung's Q3 2017 Profits
Market analysts predict that nearly $9.8 billion of the $12.9 billion operating profit has been contributed by the semiconductor and display business. This accounts for 76 percent of the company's total operating profit for the quarter.
Samsung's dependence on its component business for profits has been increased over the past few years. It helps that Samsung is a leading supplier of semiconductor components and display panels in the world. It has been actively investing in new projects to ensure its lead in these markets doesn't erode.
However, increased dependence also exposes the company to risk. The prices of memory semiconductors are expected to decrease by 2019 as Samsung and its competitors bring new plants online. Chinese influence in the OLED panel sector is also expected to surge by then.
The fact remains that Samsung is bringing in record profits now because of the decisions it made a few years ago. It remains to be seen how the company will adapt once its components business comes under pressure.
