Samsung’s Operating Margin Closing the Gap with Apple

Samsung started catching up in 2016. (image: Yonhap)

SEOUL, Jan. 9 (Korea Bizwire) – Samsung’s surprise surge in 2016 Q4 profit may further close the gap with its U.S. competitor Apple. 

According to industry watchers, Samsung reported sales revenue of 53 trillion won ($44 billion) with an operating profit of 9.2 trillion won, for an impressive operating margin of 17.36 percent. The value was an increase from 16.2 percent in Q2 2016, and the highest number over the past two years. 

Apple has always led the Korean tech giant in terms of operating margin. 

In Q1 2015, the difference between the two companies was 18.82 percentage points, with Apple and Samsung reporting 31.51 percent and 12.69 percent, respectively. In Q4 of same year, the gap further widened with Apple reporting 31.86 percent, and Samsung, 11.52 percent. 

However, Samsung started catching up in 2016. 

Apple saw a continuous drop in its operating margin from 27.67 percent in Q1 to 23.82 percent in Q2 and 19.19 percent in Q3, while Samsung saw its rate increase from 13.42 percent in Q1 to 16. 2 percent in Q2 and 17.36 percent in the last quarter, although it did plummet in Q3 to 10.87 percent from the Note 7 crisis.

Samsung’s prosperity in Q4 2016 was driven by a boom in its semiconductor business, improvement in display sales, and the success of its Galaxy S7 series, sources said. 

Apple has yet to disclose its financial results for the last quarter, but it is estimated that the company’s profit margin will come in around 20 percent, with a slight improvement from the previous quarter, which will bring down the gap between the two tech giants to a record low of 3 percent.

By Joseph Shin (jss539@koreabizwire.com)