Samsung has released its second-quarter earnings forecast, continuing its surge, with an expected operating profit growth of over 14 times, higher than that in the first quarter. However, Samsung's mobile phone business in the Chinese market still shows no signs of improvement. Nevertheless, it earns substantial revenue from China's mobile phone industry through the industrial chain and also suppresses Chinese mobile phones in markets outside China.

Samsung's soaring profits mainly stem from its memory chips. Since the second half of last year, global memory chip prices have reversed the downward trend and accelerated their rise this year, with a more than 20% increase in the first quarter. Market research agencies estimate that memory chip prices will rise by 40% in the first half of this year.

Samsung is the world's largest memory chip company, holding nearly 40% of the market share. Before 2022, when memory chip prices were high, the memory chip business contributed more than 50% of Samsung's profits. In 2022, prices continued to fall, even halving by mid-2023. However, the downcycle of memory chips ended rapidly, leading to another surge in Samsung's profits.

A considerable proportion of Samsung's memory chips are sold to the Chinese market, where Chinese mobile phones purchase a significant amount of them. Additionally, Samsung is the world's largest OLED screen supplier and the second-largest CMOS chip supplier, with Chinese mobile phone companies as their customers. At one point, Chinese mobile phones competed to adopt Samsung's 100-megapixel CMOS. It is said that Samsung earns up to 260 billion yuan annually from the Chinese market through the mobile phone industrial chain.

In markets outside China, Samsung's mobile phones suppress Chinese mobile phones. Chinese mobile phones, which have dominated the Indian market for seven years, have rapidly declined, while Samsung dominates the European market. Relying on broader markets outside China, Samsung continued to rank first in the global mobile phone market in the first quarter of this year.

Samsung's competitive strength cannot be matched by any Chinese mobile phone company in the short term. Samsung can design and manufacture 3-nanometer chips on its own, while China's most advanced chip manufacturing process is said to be 14 nanometers or 7 nanometers, and China's chip design companies have to rely on TSMC for the most advanced chips.

As mentioned above, Chinese mobile phones still need to purchase OLED screens, memory chips, and CMOS chips from Samsung, as they have not yet formed their own industrial chains and have to outsource. Even Apple, the most advanced company, needs to procure OLED and memory chips from Samsung, which is vastly different from Samsung's ability to produce all components for its mobile phones in-house.

In markets outside China, Samsung has started aggressive price wars to stabilize its market share, leading to a decline in overseas shipments for some Chinese mobile phone brands. This ensures that Samsung continues to dominate the global mobile phone market, demonstrating its strong cost control capabilities through its industrial chain advantages and its fearlessness in price wars.

In fact, Samsung's dominant TV business is similar to its mobile phone business. Although Samsung TVs do not have an advantage in the Chinese market, they dominate markets outside China, ensuring annual shipments of over 40 million units, while TCL, China's largest TV brand, ships over 27 million units.

China is a vast market, but its population is around 1.4 billion. Currently, India is the most populous country in the world, and the global population has reached around 7 billion. Markets outside China are actually very large. Some Chinese brands often boast about their domestic prowess, but their performance abroad differs significantly. Chinese brands still need to work hard to improve their internal capabilities to go global.