Samsung Electronics sees profit decline on weaker chip demand after strong third-quarter earnings

SEOUL (Reuters) – Samsung Electronics Co Ltd 005930.KS stated on Thursday it expects income to fall within the present quarter after posting its highest working revenue in two years for the third quarter.

The world’s prime maker of smartphones and reminiscence chips posted a 59% bounce in working revenue within the July-September quarter, on the again of its second-largest quarterly smartphone revenue ever at 4.45 trillion received, the corporate stated.

A close to 50% bounce in gross sales of smartphones probably displays positive factors in Samsung’s share of the market as U.S. restrictions hit Chinese language rival Huawei Applied sciences Co Ltd [HWT.UL], analysts stated.

Decrease advertising and marketing prices amid the coronavirus pandemic had been additionally a possible issue, analysts stated.

Samsung stated its chip revenue surged 82% to five.54 trillion received within the third quarter from a yr earlier, as increased gross sales of low- and mid-end smartphones and stock buildup from Huawei forward of U.S. sanctions offset weak demand from servers.

Working revenue within the third quarter was 12.35 trillion received ($10.96 billion) from 7.78 trillion received a yr earlier, consistent with the corporate’s estimate earlier this month.

Income climbed 8% to 66.96 trillion received. Internet revenue rose 49% to 9.36 trillion received.

However within the present quarter, total reminiscence chip costs are anticipated to stay weak as oversupply and an absence of restoration in server demand continues, stated Avril Wu, analyst at researcher TrendForce.

Samsung’s smartphone shipments within the present quarter are anticipated to drop about 5% in comparison with the third quarter resulting from competitors from Apple’s latest iPhone 12 and an absence of latest Samsung flagship fashions, analysts stated.

Samsung’s shares fell 1.4% in early commerce on Thursday, in comparison with the broader market’s .KS11 1.3% fall.