Business & Investment

Rising chip prices boost Samsung’s highest quarterly profits in three years By Reuters

© Reuters. File Photo: Samsung Electronics logo can be seen in an office building in Seoul, South Korea on August 25, 2017. REUTERS / Kim Hong-Ji / File Photo

By Joyce Lee and Heekyong Yang

Seoul (Reuters)-Samsung Electronics said on Friday that rising memory chip prices and display sales for the launch of its new flagship smartphone boosted operating profit in the third quarter by up to 28% in three years.

Preliminary results were up 26% from the second quarter, but slightly below expectations. Meanwhile, market reaction has slowed further as analysts expect memory chip prices to fall, resulting in flat or slightly lower results this quarter.

The world’s largest memory chip and smartphone maker estimates profits from July to September at KRW 15.8 trillion ($ 13.3 billion), below RefinitivSmart Estimate’s KRW 16.1 trillion. This is the highest quarterly profit since the third quarter of 2018.

“The operating margin of the mobile business may have been lower than the market expected,” said Park Sung-soon, an analyst at Cape Investment and Securities. “We need to see what the combination of marketing costs and products sold by Samsung (KS :) was.”

According to analysts, rising memory chip prices and shipments, as well as a surge in profitability in Samsung’s contract manufacturing business, could have increased operating profit in the chips division by about 79% year-on-year. ..

Semiconductors accounted for about half of Samsung’s operating profit in the first half of this year.

Samsung shares held back initial profits as they rose 0.4% in the afternoon trading. We plan to announce detailed earnings later this month.

Shares have fallen about 12% so far this year due to a September loss stated by US peer Micron Technology Inc (NASDAQ :) at -chipmaker-micron-forecasts-first-quarter-revenue-below-estimates-2021-09-28 Shipments of that memory chip will decline in the short term.

Analysts said memory chip prices will fall this quarter as demand for personal computers declines as smartphone shipments may decline, while global blockades that contributed to electricity sales are expected to ease. He said it was expected to fall.

The bright spot next year is expected to be Samsung’s contract manufacturing business. Samsung announced on Thursday that it plans to begin production of state-of-the-art 3 nanometer chip designs in early 2022 to compete with industry leader Taiwan Semiconductor Manufacturing Co., Ltd. Get clients ahead of the curve.

For Samsung’s mobile business, estimated sales are 2 million Analyst According to the company, demand for clamshell mobile phones has gained more mass market than last year, according to the company.

However, this could have been offset by rising marketing and component costs due to a global chip shortage.

According to analysts, Samsung’s display units are likely to have shown solid results as major customer Apple (NASDAQ :) increased orders before launching the iPhone 13 series in late September.

Samsung announced that its total sales increased by about 9% year-on-year to 73 trillion won.

($ 1 = 1,191.2500 won)

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Rising chip prices boost Samsung’s highest quarterly profits in three years By Reuters Rising chip prices boost Samsung’s highest quarterly profits in three years By Reuters

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