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Samsung has great results thanks to chips

by on11 October 2017

Chips important part of Samsung's diet

Samsung Electronics  is expected to forecast a record third quarter profit on Friday thanks to the strong market for memory chips, and as mobile earnings make a killing as rival Apple drops the ball.

The world’s biggest maker of memory chips and mobile phones has been the chief beneficiary of the semiconductor market, as mobile devices and servers demand ever greater processing power.

Brisk sales of the latest Galaxy Note 8 smartphone, launched in mid-September, also are likely to further boost its performance, analysts said.

Doh Hyun-woo, analyst at Mirae Asset Daewoo Securities said: “Samsung’s valuation is still comparatively lower than global competitors and fourth-quarter earnings will improve across the board and keep improving in 2018.”

Samsung’s July-September operating profit is expected to rise to $12.51 billion, according to a Thomson Reuters survey of 19 analysts. That is nearly three times more than the year earlier and slightly better than the previous quarter.

Strong global demand for DRAM chips will continue to outpace supply in 2018, while demand for NAND flash chips exceeded supply for six straight quarters as of last month, DRAMeXchange, a division of data provider TrendForce, said.

Samsung’s mobile division is seen posting operating profit of about three trillion won, compared to just 100 billion won in the third quarter of 2016. Pre-orders for the Note 8 hit the highest-ever for the Note series.

Lower liquid-crystal display (LCD) panel prices as well as one-off costs are expected to weigh on Samsung’s display business during the third quarter, analysts said.

However, the display business could improve in the fourth quarter on the back of sales of organic light-emitting diode (OLED) panels for new Apple smartphones. However there are signs that Apple might be forced to reduce orders for these as fewer people are interested in its current "popping" iPhone range.

Samsung will only provide estimates for July-September revenue and operating profit on Friday, and will disclose detailed results in late October.

Last modified on 11 October 2017
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