SEOUL (Reuters) – Samsung Electronics Co Ltd 005930.KS mentioned on Thursday it expects fourth-quarter revenue to fall on account of weak server chip demand and rising smartphone competitors, after posting its greatest quarterly working revenue in two years within the third quarter.
The world’s high maker of smartphones and reminiscence chips posted a 59% bounce in working revenue within the July-September quarter, on the again of its highest quarterly smartphone revenue since 2014 at 4.45 trillion gained (3.03 billion kilos).
A close to 50% bounce in gross sales of smartphones doubtless displays features in Samsung’s share of the market as U.S. restrictions hit Chinese language rival Huawei Applied sciences Co Ltd, analysts mentioned.
Decrease advertising prices amid the coronavirus pandemic have been additionally a probable issue, analysts mentioned.
Samsung mentioned its chip revenue surged 82% to five.54 trillion gained from a 12 months earlier, as greater gross sales of low- and mid-end smartphones and stock buildup from Huawei forward of the U.S. restrictions offset weak demand from servers.
Samsung’s show enterprise, which counts Apple Inc AAPL.O amongst its prospects, mentioned its working revenue fell from a 12 months earlier due to delays of recent mannequin launches by a significant buyer.
Working revenue within the third quarter was 12.35 trillion gained from 7.78 trillion gained a 12 months earlier, in keeping with the corporate’s estimate earlier this month.
Income climbed 8% to 66.96 trillion gained. Internet revenue rose 49% to 9.36 trillion gained.
“Mushy costs in server reminiscence on account of prospects’ stock changes will doubtless crush the Reminiscence Enterprise regardless of secure demand for cellular and laptop computer reminiscence,” Samsung mentioned in an announcement.
Samsung’s smartphone shipments within the present quarter are anticipated to drop about 5% in comparison with the earlier interval on account of competitors from Apple’s latest iPhone 12 and an absence of recent Samsung flagship fashions, analysts mentioned.
“With Huawei’s presence changing into fainter within the smartphone market, Samsung’s advertising prices are anticipated to be greater within the present quarter as Apple, Vivo, Xiaomi and Samsung attempt to take over Huawei’s market share,” mentioned Park Sung-soon, an analyst at Cape Funding & Securities.
Samsung’s show earnings would profit from sturdy demand for Apple’s first 5G iPhones, he added.
Samsung’s shares fell 1.4% in early commerce on Thursday, in comparison with the broader market’s .KS11 1.3% fall.
Reporting by Joyce Lee and Hyunjoo Jin; extra reporting by Heekyong Yang; Modifying by Stephen Coates