Skip to main content




Samsung says Q3 profit likely highest in 3 years on rising chip prices

Samsung says Q3 profit likely highest in 3 years on rising chip prices

FILE PHOTO: The logo of Samsung Electronics is seen at its office building in Seoul, South Korea, August 25, 2017. REUTERS/Kim Hong-Ji/File Photo

SEOUL: Samsung Electronics said on Friday (Oct 8) its third-quarter operating profit likely rose 28 per cent to the highest in three years, driven by rising memory chip prices and display sales for smartphone makers' new flagship launches.

The world's largest memory chip and smartphone maker estimated its July-September profit at 15.8 trillion won (US$13.3 billion), slightly below a Refinitiv SmartEstimate of 16.1 trillion won. It is highest quarterly result since the third quarter of 2018.

"The mobile business' operating margin might have been lower than the market expected," said Park Sung-soon, analyst at Cape Investment & Securities. "We will have to see marketing costs and what the mix of products Samsung sold was like."

Rising memory chip prices and shipments, plus a jump in profitability at Samsung's chip contract manufacturing business, likely raised the chip division's operating profit by about 79 per cent from a year earlier, analysts said.

Semiconductors accounted for about half of Samsung's operating profit in the first half of the year.

It is due to announce detailed earnings later this month.

Samsung's current quarter operating profit is expected to be similar to or slightly below the third quarter, analysts said, pointing to expectations that prices for memory chips used in personal computers will tumble from the fourth quarter as global lockdowns ease, while smartphone shipments may also decline.

A bright spot next year is expected to be Samsung's chip contract manufacturing business, which on Thursday announced plans to start producing cutting-edge, 3-nanometre chip designs in the first half of 2022, as it races against industry leader Taiwan Semiconductor Manufacturing to preempt advanced technology and win clients.

For Samsung's mobile business, estimated sales of 2 million new flagship smartphones within a month showed demand for its foldable handsets captured more of the mass market than last year, analysts said.

However, this was likely offset by marketing costs and higher component costs due to the global chip shortage.

Samsung's display unit likely saw solid results as key customer Apple Inc ramped up orders before its late-September launch of the iPhone 13 series, analysts said.

Overall revenue likely rose about 9 per cent from the same period a year earlier to a record 73 trillion won, Samsung said in a filing.

Source: Reuters/aj


Also worth reading