Samsung reports highest profits in 3 years on surging chip demand

Samsung Electronics reported its highest quarterly income in three years and stated the worldwide chip crunch would proceed into subsequent yr, however the outcomes didn’t allay considerations about its long-term technique.

The world’s greatest maker of laptop chips, smartphones and digital shows has benefited from surging demand in the course of the Covid-19 pandemic, however chip costs have come beneath stress as staff have begun to return to the workplace and economies reopen.

Samsung’s web revenue jumped 31 per cent to Won12.3tn ($10.4bn) within the July-September quarter as gross sales elevated 10 per cent to a document Won74tn.

The corporate cautioned that part shortages at some prospects might have an effect on demand within the fourth quarter and warned of uncertainties subsequent yr as a consequence of provide chain disruptions and better costs for uncooked supplies.

Samsung expects dwelling equipment gross sales to weaken in 2022 as persons are forecast to spend much less time at dwelling, however it’s optimistic that smartphone gross sales will improve, after rising final quarter due to the recognition of its flagship foldable gadgets.

Samsung shares had been up 0.3 per cent after it introduced the outcomes, leaving the inventory down 12 per cent this yr, with buyers involved concerning the firm’s technique and on anxieties that the chip cycle might flip.

“We’re more likely to see stagnant gross sales of client electronics subsequent yr, given potential stagflation and unstable vitality costs,” stated Kim Younger-woo, an analyst at SK Securities.

Samsung stated it was assured that any slowdown within the chip market was “unlikely to be deep and lengthy”.

The authorized troubles of the group’s leader Lee Jae-yong have additionally weighed on the corporate following his launch from jail in August after serving 19 months for bribing former president Park Geun-hye.

Lee was additionally fined Won70m this week for his unlawful use of sedatives after he admitted utilizing propofol 41 occasions over a five-year interval.

He’s going through a separate trial over alleged monetary crimes linked to the 2015 merger of two Samsung items that allegedly helped him to consolidate management of the group. Lee and the corporate have denied any wrongdoing.

Lee’s jail time period was minimize brief as opinion polls confirmed that Koreans believed his management was wanted to drive large-scale investments amid a worldwide battle for semiconductor supremacy.

However Samsung has but to make a remaining choice on plans to construct a $17bn semiconductor plant within the US and the group’s acquisition drive has stalled since its $8bn buy of automotive provider Harman in 2017.

“M&As don’t appear to be their precedence in the mean time with Lee nonetheless being caught up in authorized bother,” stated an business analyst. “Traders stay in the dead of night over its long-term progress methods together with M&As. The corporate seems directionless with no clear methods for brand new progress drivers.”

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