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Samsung Reports Best Quarterly Profit In 3 Years Fueled By Surging Chip Prices – Cryptovibes.com – Daily Cryptocurrency and FX News

Samsung Reports Best Quarterly Profit In 3 Years Fueled By Surging Chip Prices – Cryptovibes.com – Daily Cryptocurrency and FX News


  • Profit highest since 2018 but slightly below estimates
  • Marketing costs may have offset foldable sales-analysts
  • Falling memory chip prices to weigh on Q4-analysts

The rising memory chip prices and display sales for new flagship smartphone launches steered a 28% jump in the company’s third-quarter operating profit to the highest in three years, Samsung Electronics Co Ltd (005930. KS) said on October 8, 2021.

Although the preliminary result was up 26% from the second quarter, it was just below forecasts, while the market reaction was further muted as analysts penciled in a flat or slightly lower result this quarter on an expected fall in memory chip prices.

The world’s largest memory chip and smartphone maker estimated its July-September profit was below a Refinitiv SmartEstimate, with 15.8 trillion won ($13.3 billion) and 16.1 trillion won respectively. Since the third quarter of 2018, it is the highest quarterly. Park Sung-soon, an analyst at Cape Investment & Securities, said:

“The mobile business’ operating margin might have been lower than the market expected. We will have to see marketing costs and what the mix of products Samsung sold was like.”

Analysts said that in addition to rising memory chip prices and shipments, a jump in profitability at Samsung’s chip contract manufacturing business helped increase the chip division’s operating profit by about 79% from a year earlier.

In the first half of the year, semiconductors accounted for about half of Samsung’s operating profit.

While it is due to announce detailed earnings later this month, its shares pared early gains to be up 0.4% in the afternoon trade on Friday.

Hurt by losses in September when U.S. peer Micron Technology Inc (MU.O) said its memory chip shipments would slip in the near term, the stock has fallen by about 12% so far this year versus a 3% rise in the wider market (.KS11).

This quarter, memory chip prices are expected to tumble as demand for personal computers drops amid an expected easing in global lockdowns that have helped power sales, while smartphone shipments may also decline.

Samsung’s chip contract manufacturing business, which on October 7 announced plans to start producing cutting-edge, 3-nanometre chip designs in the first half of 2022, is expected to be a bright spot next year as it races against industry leader Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) to preempt advanced technology and win more clients.

Analysts said that for Samsung’s mobile business, estimated sales of 2 million new foldable smartphones within a month showed demand for its foldable handsets captured more of the mass market than last year.

However, this was likely offset by marketing costs and higher component costs due to the global chip shortage.

Samsung’s key customer, Apple Inc (AAPL.O), ramped up orders before its late-September launch of the iPhone 13 series, which likely saw solid results for Samsung’s display unit, analysts said.

Samsung said in a filing that overall revenue likely rose by about 9% from the same period a year earlier to a record 73 trillion won.

($1 = 1,191.2500 won).



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