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Samsung expected to post 35% uptick in Q3 profit on smartphone sales recovery

Samsung, the world's biggest memory chip supplier, is scheduled to announce preliminary July-September operating profit and revenue on Thursday

twitter-logoReuters | October 7, 2020 | Updated 09:17 IST
Samsung expected to post 35% uptick in Q3 profit on smartphone sales recovery

Samsung Electronics Co Ltd's September-quarter profit likely surged more than a third, fuelled by strong smartphone sales and a rush order of memory chips from Huawei Technologies Co Ltd, analysts said. Samsung, the world's biggest memory chip supplier, is scheduled to announce preliminary July-September operating profit and revenue on Thursday.

Profit likely rose 35% to 10.5 trillion won (7.04 billion pounds) from the same period a year earlier, according to Refinitiv SmartEstimate, derived from analyst estimates weighted toward those more consistently accurate. Revenue likely rose 3%. While Samsung's overall chip business was muted, analysts said orders from Chinese smartphone maker Huawei likely propped up sales. Huawei is likely to have built stockpiles before U.S. sanctions from mid-September prevented it from buying chips made using U.S. technology without a license, analysts said.

Last year Samsung's chip business accounted for roughly half of its profit. U.S. rival Micron Technology Inc posted market-beating profit last month, likely helped by Huawei's rush to secure inventory, analysts said. "Huawei's emergency orders from late August drove up Samsung's DRAM and NAND chip shipments, offsetting the effect of weak prices and limiting the drop in semiconductor profits for the quarter," said analyst Song Myung-sup at HI Investment & Securities.

Prices of DRAM chips, which allow devices to multi-task, and of NAND chips, which store data, fell in July-September, showed DRAMeXchange data. Samsung's smartphone profit, which accounted for one-third of earnings last year, likely jumped as handset demand rebounded after the COVID-19 pandemic curbed sales in the first half of 2020. Third-quarter smartphone shipments likely rose 48% to 80 million from the second quarter, according to analysts and data from Counterpoint Research.

Profit at Samsung's display business likely fell, hurt by a later-than-expected launch of customer Apple Inc's new iPhone. However, earnings from television sets and home appliances likely rose as Samsung sold more gadgets online and cut operating costs, analysts said.

Samsung is scheduled to release detailed earnings figures later this month.

Also read: COVID-19 vaccine: Centre expects to inoculate 25 crore people using 50 crore doses by July 2021

Also read: US lawmakers detail Big Tech's market abuses, press for strict reforms

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