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Samsung Electronics

Samsung Elec flags surprise Q3 profit; to reach 2-yr high on phones, Huawei

By Oct 08, 2020 (Gmt+09:00)

2 Min read

Samsung Electronics Co.’s third-quarter profit likely jumped nearly 60% to its highest point in two years, smashing market expectations, thanks to a rise in smartphone sales and US restrictions on rival Huawei Technologies Co.

In its third-quarter earnings guidance announced on Oct. 8, Samsung estimated its operating profit at 12.3 trillion won ($10.6 billion), up 58% from a year ago and a 51% rise from the preceding quarter. If so, it will be the highest quarterly result since the 17.57 trillion won posted in the third quarter of 2018.

Market analysts expected the South Korean tech giant to post around 11 trillion won in operating profit for the three months ending in September.

Samsung didn’t provide net income or break down performance by division, which will be available later this month when it releases final third-quarter earnings.

According to preliminary results announced on Thursday, third-quarter revenue rose 6% to 66 trillion won from the same period a year earlier. If the revenue estimate is confirmed, it will mark Samsung’s largest-ever quarterly sales.

Samsung Elec flags surprise Q3 profit; to reach 2-yr high on phones, Huawei

Shares of Samsung were up 0.3% at 60,100 won in late afternoon trading after rising as much as 1% earlier in the day, when the company released its estimates.

Analysts say the firm’s strong quarterly performance was led by its robust mobile business, which also benefited from a US ban on Chinese tech company Huawei that came into effect on Sept. 15.

Samsung’s smartphone shipments likely jumped to some 80 million units from 54.2 million in the previous quarter, with demand rebounding from a contraction caused by the COVID-19 pandemic, according to analysts.

Apple Inc.’s delayed launch of its 5G iPhones to October as well as Samsung’s reduced marketing costs in the pandemic era also contributed to its stellar performance.

The world’s largest memory chipmaker’s overall semiconductor business was pressured by weaker chip prices, but its shipments got a boost from increased orders form Huawei, which had been stockpiling ahead of US restrictions on the Chinese firm from mid-September.

AIDED BY PANDEMIC

Analysts have turned buoyant on Samsung given increased memory chip demand driven by remote schooling and work amid the coronavirus pandemic.

Its non-memory business is being propelled by a series of deals to make chips for Qualcomm Technologies Inc. and other tech companies as Samsung moves to expand its foundry business.

Application chips made by Samsung Electronics
Application chips made by Samsung Electronics

Samsung’s home appliance business also got a lift from the pandemic as the stay-at-home environment sent consumers to shop for high-end TVs and other home appliances to spend more time indoors or alone.

Yet analysts said falling chip prices could put a damper on Samsung’s performance in the final quarter of the year.

Barring the unexpected, however, Samsung is widely expected to post 37 trillion won in full-year operating profit, about 10 trillion won more than its 2019 results. Analysts expect revenue to hover around 244 trillion won.

Write to Hyung-Suk Song, Seung-Woo Lee and Jeong-Soo Hwang at click@hankyung.com
Edited by In-Soo Nam
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