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October 24, 2018

Booming chip biz drives up Samsung’s profits in Q3

PUBLISHED : October 05, 2018 - 11:22

UPDATED : October 05, 2018 - 11:22

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[THE INVESTOR] Samsung Electronics is forecast to post a record operating profit in the July-September period thanks to its robust semiconductor sales, according to the firm’s earnings guidance on Oct. 5.

The company said that it expects its operating profit in the three months will stand at 17.5 trillion won (US$15.50 billion), up 20.4 percent from 14.5 trillion won posted during the same period last year.

The estimated operating profit exceeds the previous market consensus of 17.1 trillion won. The quarterly revenue will likely come in at 65 trillion won, up 4.8 percent on-year, the company said.




Samsung’s booming memory chip business, which is expected to have earned 13.5 trillion won in the third quarter, played a crucial role in the profit jump, according to market analysts.

Its mobile division is forecast to see its operating income drop to 2 trillion won, down from 3.29 trillion won year-on-year, due to slowing smartphone sales. Its consumer electronics division’s operating profit will likely stand at 600 billion won.

Market analysts had mixed opinions on Samsung’s profits in the chip business, which have been on an upward trend for nearly two years, in the coming months.

Some claimed Samsung would lose steam due largely to the anticipated price drop of DRAM in the next year or so while others said high demand in the data center market would continue to boost the company’s bottom line.

“Despite the recent controversy over DRAM prices, the chip business will continue to post upbeat profits thanks to high demand in the data center segment, in particular,” Doh Hyun-woo, an analyst from NH Investment & Securities.

Some global investment firms Goldman Sachs and Morgan Stanley cast grim outlooks on the global semiconductor market, which they said would be hit hard by falling demand in the fourth quarter and 2019.

By Kim Young-won (wone0102@heraldcorp.com)

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