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

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The emblem of Samsung Electronics is seen at its workplace constructing in Seoul, South Korea, August 25, 2017. REUTERS/Kim Hong-Ji/File Photograph

  • Revenue highest since 2018 however barely beneath estimates
  • Advertising and marketing prices could have offset foldable sales-analysts
  • Falling reminiscence chip costs to weigh on This autumn-analysts

SEOUL, Oct 8 (Reuters) – Samsung Electronics Co Ltd stated on Friday its third-quarter working revenue possible rose 28% to the best in three years, pushed by rising reminiscence chip costs and show gross sales for smartphone makers’ new flagship launches.

The world’s largest reminiscence chip and smartphone maker estimated its July-September revenue at 15.8 trillion received ($13.3 billion), barely beneath a Refinitiv SmartEstimate of 16.1 trillion received. It’s highest quarterly end result because the third quarter of 2018.

“The cellular enterprise’ working margin might need been decrease than the market anticipated,” stated 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, possible raised the chip division’s working revenue by about 79% from a yr earlier, analysts stated.

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

Samsung shares pared early good points after its preliminary earnings launch to be up 0.7% in morning commerce. It is because of announce detailed earnings later this month.

The inventory has fallen about 12% thus far this yr versus a 3% rise within the wider market , damage by losses in September when U.S. peer Micron Know-how Inc its reminiscence chip shipments would slip within the close to time period.

Samsung’s present quarter working revenue is anticipated to be much like or barely beneath the third quarter, analysts stated, pointing to expectations that costs for reminiscence chips utilized in private computer systems will tumble from the fourth quarter as world lockdowns ease, whereas smartphone shipments might also decline.

A shiny spot subsequent yr is anticipated 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 towards trade chief Taiwan Semiconductor Manufacturing Co Ltd to preempt superior expertise and win shoppers.

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

Nevertheless, this was possible offset by advertising prices and better element prices as a result of world chip scarcity.

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

General income possible rose about 9% from the identical interval a yr earlier to a file 73 trillion received, Samsung stated in a submitting.

($1 = 1,191.2500 received)

Reporting by Joyce Lee and Heekyong Yang; Modifying by Christopher Cushing and Richard Pullin

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