Samsung Electronics profit nearly doubles
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Samsung Electronics profit nearly doubled in the third-quarter, mainly led by strong returns from its chip business amid an industry-wide boom.
And it had a helping hand from rival Apple, for whom it makes screen for the iPhone X.
Samsung Electronics profit reached 11.1 trillion won (US$9.87 billion), jumping from 4.53 trillion won posted a year earlier.
Sales rose 29.7 per cent to reach 62 trillion won and operating profit came to 14.53 trillion won in the July-September period, also rising sharply from 5.2 trillion won posted last year.
CNBC reported that Samsung is on track for record full-year profit, with analysts forecasting even better fourth-quarter on strong memory chip prices and organic light-emitting diode (OLED) screen sales for Apple’s iPhone X.
The company’s operating margin reached 23.4 per cent in the third quarter, significantly rising from 10.9 per cent posted a year earlier.
Samsung Electronics said its chip business raked in a record operating profit of 9.96 trillion won, helped by the rising seasonal demand. Its products’ prices increased due to limited supply in the market.
For the fourth quarter, Samsung said the shipment of its products is expected to continue growing, as more mobile devices are adopting high-end memory chips and demand from data centres rising.
“Samsung Electronics profit reached 11.1 trillion won (US$9.87 billion), jumping from 4.53 trillion won posted a year earlier.”
“Looking to 2018, high demand from data center infrastructure expansion is forecast to continue while demand for contents growth in mobile products will rise on the widespread adoption of dual camera, 3D sensors and on-device AI offerings,” Samsung Electronics said.
The tech giant added that the IT and Mobile Communications division, which covers smartphones, posted an operating profit of 3.29 trillion won, a huge turnaround from the meagre 100 billion won posted a year earlier, when the handset business was hurt by the suspended production of the Galaxy Note 7.
The company, however, said while its shipment of smartphones in terms of units remained strong due to the release of the Galaxy Note 8 and robust sales of the Galaxy J series, the rising portion of budget models in the portfolio led to a decrease in earnings from 4.06 trillion won posted a quarter earlier.
Industry watchers said the mobile arm’s performance is still better than expected, as the business was widely seen to remain sluggish due to increasing expenditure on marketing projects for the Galaxy Note 8.
Preorders for the Galaxy Note 8 in South Korea came to 850,000 units, more than doubling the 400,000 units posted by its predecessor, the Galaxy Note 7.
Experts said Samsung’s fourth-quarter performance is also anticipated to improve on the full-fledged sales of the Galaxy Note 8.
The South Korean electronics company said it expects tougher competition in the market for the fourth quarter, saying it will release the new phablet in more countries in order to maintain sound returns.
The consumer electronics division posted an operating profit of 440 billion won. Samsung said the performance falls behind the 790 billion won posted a year earlier due to changes in TV panel prices, although the increased shipments of premium products led to an on-quarter rise.
Questions & Answers
Q.What contributed most significantly to Samsung Electronics' profit nearly doubling in the third quarter?
What contributed most significantly to Samsung Electronics' profit nearly doubling in the third quarter?
The chip business was the main driver of the profit increase, benefiting from an industry-wide boom. It also received support from supplying screens for Apple's iPhone X.
Q.How did Samsung's mobile division perform in the third quarter compared to the previous year?
How did Samsung's mobile division perform in the third quarter compared to the previous year?
The IT and Mobile Communications division posted an operating profit of 3.29 trillion won, a significant improvement from 100 billion won a year earlier, when Galaxy Note 7 production was suspended.
Q.Why did the mobile division's earnings decrease from the previous quarter, despite strong unit shipments?
Why did the mobile division's earnings decrease from the previous quarter, despite strong unit shipments?
While unit shipments of smartphones remained strong due to the Galaxy Note 8 release and Galaxy J series sales, the increased proportion of budget models in the portfolio led to a decrease in earnings.
Q.What is Samsung's outlook for demand in 2018, according to the article?
What is Samsung's outlook for demand in 2018, according to the article?
Samsung forecasts continued high demand from data centre infrastructure expansion. Demand for content growth in mobile products is also expected to rise with the adoption of dual cameras, 3D sensors, and on-device AI.