South Korean technology giant Samsung Electronics Co. has overtaken Santa Clara, Calif.-based Intel Corp.’s (INTC) as the world’s No. 1 chipmaker in terms of revenue.

Samsung, most well-known for its smartphones and televisions, reported second-quarter sales of $15.7 billion for its semiconductor unit and operating profit of $7.1 billion. For the first time, Intel fell behind its Asian rival with Q2 chip revenue of $14.8 billion and operating profit of $3.8 billion. Samsung mainly generates its chip segment revenue through selling memory chips used in mobile devices, as opposed to Intel, which focuses on microprocessors.

Gains on NAND and DRAM Memory Chips

After nearly a quarter-century at the helm, Intel is expected to trail behind Samsung at least through the end of this year amid a memory chip supply squeeze. The resultant hike in prices has benefited Samsung disproportionately as it has become a major player in the data storage space, manufacturing highly demanded NAND and DRAM chips. While NAND prices have surged 50% over the past year, DRAM prices have gained 115% over the same period, according to DRAMeXchange.

While memory chips have historically been a lower-margin commodity, characterized by volatile price swings, Samsung has invested billions of dollars in efforts to lead the next-generation of the industry with small-size chips that offer immense storage and multitasking ability. The company now benefits from its ability to carry out large-scale production as the Internet of Things (IoT) drives a boom in demand for data storage. On the other hand, Intel’s higher-margin processing chips, used for the PCs and servers that run corporate operations, cloud computing and communications networks, are less of revenue drivers as PC demand slows and data center customers find means to make fewer chips do more work.

The world’s leading smartphone maker, Samsung, is also slated to surpass Apple Inc. (AAPL) in quarterly profits when the Silicon Valley firm posts its Q2 results on Tuesday. (See also: Why Intel Is Falling as AMD, NVIDIA Surge.)

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