Samsung’s Posts Best Quarterly Profit in 3 Years Amid Rising Chip Prices


Samsung Electronics on Friday flagged a 28 % soar in its third-quarter working revenue to the best in three years, pushed by rising reminiscence chip costs and show gross sales for brand new flagship smartphone launches. The preliminary end result was up 26 % from the second quarter, though slightly below forecasts, whereas the market response was additional muted as analysts pencilled in a flat or barely decrease end result this quarter on an anticipated fall in reminiscence chip costs.

The world’s largest reminiscence chip and smartphone maker estimated its July-September revenue at KRW 15.8 trillion (roughly Rs. 99,190 crores), beneath a Refinitiv SmartEstimate of KRW 16.1 trillion (roughly Rs. 1,01,080 crores). It is the best quarterly revenue because the third quarter of 2018.

“The mobile business’ operating margin might have been lower than the market expected,” mentioned Park Sung-soon, analyst at Cape Investment & Securities. “We should see advertising prices and what the combination of merchandise Samsung offered was like.”

Rising reminiscence chip costs and shipments, plus a soar in profitability at Samsung’s chip contract manufacturing enterprise, possible raised the chip division’s working revenue by about 79 % from a yr earlier, analysts mentioned.

Semiconductors accounted for about half of Samsung’s working revenue in the primary half of the yr.

Samsung shares pared early positive factors to be up 0.4 % in afternoon commerce. It is because of announce detailed earnings later this month.

The inventory has fallen about 12 % to this point this yr versus a 3 % rise in the broader market, damage by losses in September when US peer Micron mentioned its reminiscence chip shipments would slip in the close to time period.

Analysts mentioned costs for reminiscence chips are anticipated to tumble this quarter as demand for private computer systems drops amid an anticipated easing in international lockdowns which have helped energy gross sales, whereas smartphone shipments may additionally decline.

A shiny spot subsequent yr is anticipated to be Samsung’s chip contract manufacturing enterprise, which on Thursday introduced plans to begin producing cutting-edge, 3-nanometre chip designs in the primary half of 2022, because it races in opposition to trade chief Taiwan Semiconductor Manufacturing Co to preempt superior expertise and win shoppers.

For Samsung’s cell enterprise, estimated gross sales of two million new foldable smartphones inside a month confirmed demand for its foldable handsets captured extra of the mass market than final yr, analysts mentioned.

However, this was possible offset by advertising prices and better part prices as a result of international chip scarcity.

Samsung’s show unit possible noticed stable outcomes as key buyer Apple ramped up orders earlier than its late-September launch of the iPhone 13 sequence, analysts mentioned.

Overall income possible rose about 9 % from the identical interval a yr earlier to a report KRW 73 trillion (roughly Rs. 4,58,230 crores), Samsung mentioned in a submitting.

© Thomson Reuters 2021