What's going on?
On Friday, Samsung Electronics said that its quarterly profit would be higher than ever before – and it had Apple (in part) to thank.
What does this mean?
The Korean company reckons it’ll pull in over $15 billion of profit from its last three months. Although Samsung hasn’t released all the sordid details yet, analysts think that strong earnings were driven by sales of memory chips (it is the biggest chipmaker in the world these days) and good profit margins on its display and consumer electronics business – in which it makes flexible screens that are used in the new iPhones. With Apple contributing around 27% of Samsung’s display segment’s sales, Apple’s rising tide – thanks to iPhone sales – is lifting Samsung’s boat.
Why should I care?
The bigger picture: Somebody might be winning in the trade war.
With the US and China butting heads over trade, Samsung (being Korean and not Chinese) may stand to benefit from the tension. It might see more demand for its chips from the US, siphoned from Chinese chipmakers (whose chips may be comparatively more expensive due to import taxes). Samsung hasn’t got all its eggs in one basket, and that seems to be paying off – even if its smartphones haven’t been doing so well, the company as a whole is.
For markets: Where there’s smoke… a selloff ensues.
Speaking of US-China tension, a report released by Bloomberg on Thursday said Chinese spies had placed chips in equipment used by around 30 US tech companies – giving investors a fright and leading them to sell their stocks. If sensitive information was indeed accessed, new products could be copied (quicker than they otherwise might’ve been), resulting in alternative options for consumers and fewer sales for the OGs. Companies might also have to spend on new hardware without malicious chips, which would hit profits. Apple and Amazon were both name-checked but denied the claims.