[This story was written originally for ZDNet on October 6, 2015 reporting from Seoul, South Korea]
Continued strong demand for TVs, tablets, and handsets will see a profit surge over the next two years, according to a Korean report.
Affiliates of Samsung Electronics that produce displays, components, modules, and other parts that go into millions of TVs, tablets, and handsets around the world, are estimated to perform well over the next two years on continued strong demand, according to a new South Korean report.
Samsung Electro-Mechanics will earn an estimated 293.7 billion won ($244.75 million) in operating profits this year, 347.2 billion won ($289.3 million) next year, and 437.1 billion won ($364.25 million) in 2017, according to a report by Hyundai Securities on Tuesday. This is an estimated 18 percent increase in operating profits for 2016 and a 25 percent increase in profits for 2017.
The report suggests that the strong growth by affiliates is dependent on the strength of the demand for OLED displays, components, and modules, and predicted growth to continue over the next two years — an opinion backed by some analysts in Seoul.
Total sales of Samsung Electro-Mechanics over the same period are estimated at 6.516 trillion won this year, 6.472 trillion won next year, and 6.929 trillion won in 2017, according to figures by Hyundai Securities.
“Right now they are recording over a 90 percent capacity,” said Park Young, a technology analyst at Hyundai Securities, who did not produce the report. He added, however, that this can get lower depending on demand from smartphone makers.
Meanwhile, Samsung Display began making OLEDs for Huawei for the first time earlier this year. Demand has risen since, and now 20 percent of the OLED it manufactures goes to the Chinese handset maker. Samsung Electronics receives 80 percent of the displays that the affiliate produces, the company said.
Growth of Chinese vendors will continue to benefit Samsung Display going forward.
Hyundai Securities has estimated that Samsung SDI will earn 60.8 billion won ($50 million) in operating profits this year, 181.4 billion won ($151.16 million) next year, and 203.6 billion won ($169.6 million) in 2017. Total sales have been estimated to reach 7.726 trillion won ($6.438 billion) this year, 8.496 trillion won ($7.08 billion) next year, and 8.711 trillion won ($7.259 billion) in 2017.