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How Apple is making Samsung rich


Samsung Electronics forecasted record profit and sharply increased revenue in an earnings guidance release on Friday. Samsung expects its operating profit to increase 72% to $12.1 billion and revenue to rise 18% to around $52 billion.

Those are strong results – and it looks like it’s coming from Samsung’s top smartphone rival, Apple, analysts told Reuters.

Samsung is best known as a brand that sells phones like the Galaxy S8 . But its most profitable division actually sells parts, like screens and memory chips, to companies including Apple .

In fact, Samsung is reported to be the only supplier of the new next-generation OLED screen that will be a key selling point of the iPhone 8 .

Wall Street analysts expect Apple’s iPhone 8 to be a sales monster, with a new design and a backlog of loyal customers waiting to upgrade spurring a “super cycle” of sales. If Apple plans to launch the iPhone in September, it’s probably already taking shipments of parts from its suppliers, including Samsung.

“Final June sales for our Apple Monitor rose by 18% month-over-month and well above the average decline of 2% over the past twelve years. This compares to the five year average decrease of 7% and a 2% increase in June 2016,” Drexel Hamilton analyst Brian White wrote in a note looking at Apple’s suppliers that he calls “Apple Monitor.”

“We believe the initial ramp of certain components for the new iPhones this fall, combined with recently launched Macs and iPad Pros, contributed to this performance,” he continued.

Samsung’s operating profit this quarter may even top Apple’s for the first time. Analysts estimate Apple’s operating profit this quarter at $10.52 billion, according to Bloomberg data.

So even though Samsung’s vice-chairman and heir apparent Lee Jay-young is on trial for his role in an alleged corruption scheme, the company continues to deliver huge results.

Samsung will announce its actual earnings at the end of the month. Apple’s earnings report is scheduled for August 1.

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