Samsung estimates profits hit a three-year high last quarter, likely helped by Apple

The global chip shortage is a pain for consumers, but it’s boosting many businesses’ bottom lines, including Samsung’s. The tech giant estimates that second-quarter operating profit hit a three-year high, up 53% year-on-year.

Samsung on Tuesday predicted operating profits of 12.5 trillion won ($11 billion) for the three months ending June 30, beating analysts’ expectations of around 11.3 trillion won. It also expects revenue of 63 trillion won ($55.4 billion), marking a near 19% YoY increase.

While the vast demand and increasing chip prices have played a significant part in Samsung’s healthy financials, it said the earnings reflected a one-time gain related to its display business. According to IBK Securities analyst Kim Woon-ho (via Bloomberg), that payment likely comes from Apple.

“The total number of iPhone sales didn’t meet the contract requirement of OLED panels partly because iPhone mini sales were lower than expected,” he said. “Usually the reimbursement amount is around 1 trillion won.”

It wouldn’t be the first time this situation occurred. Not selling enough iPhones last year meant Apple ordered fewer OLED panels than its contract with Samsung stipulated. As such, Cupertino had to pay its rival a penalty of around $950 million.

Samsung doesn’t provide specific results from its various divisions until the full results are released on July 29. The company warned in the first quarter that smartphone revenue and profit were expected to drop due to a fall in sales, a result of chip shortages, supply chain disruptions in Vietnam, falling demand in India, and the early launch of the Galaxy S21 series.

The massive demand from data centers and rising prices has benefitted Samsung’s DRAM and NAND chip business. DRAM prices were up 27% in the second quarter, while NAND was up 8.6%.

Despite the strong report, Samsung’s shares, which have gained around 50% over the last year, were down 1.1% this morning, likely due to disappointing phone sales and concerns over a downturn in the memory market.