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

Samsung Electronics on Friday flagged a 28 p.c bounce in its third-quarter working revenue to the best in three years, pushed by rising reminiscence chip costs and show gross sales for brand spanking new flagship smartphone launches. The preliminary end result was up 26 p.c from the second quarter, though just under 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’s the highest quarterly revenue because the third quarter of 2018.

“The cellular enterprise’ working margin might need been decrease than the market anticipated,” mentioned Park Sung-soon, analyst at Cape Funding & Securities. “We should see advertising prices and what the combo of merchandise Samsung offered was like.”

Rising reminiscence chip costs and shipments, plus a bounce in profitability at Samsung’s chip contract manufacturing enterprise, doubtless raised the chip division’s working revenue by about 79 p.c from a 12 months earlier, analysts mentioned.

Semiconductors accounted for about half of Samsung’s working revenue within the first half of the 12 months.

Samsung shares pared early features to be up 0.4 p.c in afternoon commerce. It is because of announce detailed earnings later this month.

The inventory has fallen about 12 p.c to date this 12 months versus a 3 p.c rise within the wider market, harm by losses in September when US peer Micron mentioned its reminiscence chip shipments would slip within 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 world lockdowns which have helped energy gross sales, whereas smartphone shipments can also decline.

A shiny spot subsequent 12 months is predicted to be Samsung’s chip contract manufacturing enterprise, which on Thursday introduced plans to start out producing cutting-edge, 3-nanometre chip designs within the first half of 2022, because it races in opposition to business chief Taiwan Semiconductor Manufacturing Co to preempt superior expertise and win purchasers.

For Samsung’s cellular 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 12 months, analysts mentioned.

Nevertheless, this was doubtless offset by advertising prices and better element prices because of the world chip scarcity.

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

Total income doubtless rose about 9 p.c from the identical interval a 12 months earlier to a document KRW 73 trillion (roughly Rs. 4,58,230 crores), Samsung mentioned in a submitting.

© Thomson Reuters 2021

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