Samsung Electronics likely to report best quarterly profit in 3 years

Seoul, Oct. 6 (BUS): Samsung Electronics Co Ltd is likely to post its best quarterly profit in three years and post record revenue, as a result of higher memory chip prices and rapid sales of its new foldable smartphones, analysts estimate.

Operating profit for the world’s largest smartphone and memory chip maker likely jumped 16.1 trillion won ($14 billion) in the quarter ending in September, according to a Refinitiv SmartEstimate estimate from 16 analysts, geared toward those consistently more accurate.

That would rise 30% from 12.35 trillion won a year earlier and the highest since the third quarter of 2018. Revenue is likely to rise 11% to 74.6 trillion won, a record high.

An unprecedented global shortage of semiconductor chips amid the pandemic has boosted results and shares of Samsung, which surged 45% last year and hit a record high at the start of 2021.

But the stock has since fallen, compounding its losses in September when its US counterpart Micron warned that its memory chip shipments would decline in the near term, amid industry views that chip prices would fall after peaking in July and September.

“Samsung shares have fallen on Micron’s guidance, but unlike Micron, Samsung is absorbing key components…and has other businesses like mobile and foundry to boost performance,” Hanwha Investment & Securities analyst Lee Soon-hook said, according to Reuters.

“Memory chip prices are expected to rebound next year after a short period of decline,” Lee added.

Samsung will announce preliminary results on Friday.

Samsung’s chip division is likely to report operating profit of 9.9 trillion won, according to the forecasts of six analysts on average, up 79% from the previous year, boosted by higher memory chip prices and shipments.

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Prices for DRAM chips, used in servers, mobile phones and other computing devices, jumped 7.9% from the June quarter, while prices for NAND flash chips serving the data storage market rose 5.5%, according to data from research provider Trendforce.

Analysts also expect a double-digit operating margin for Samsung’s chip contract manufacturing business as customers rush to secure production capacity.

Analysts said the mobile division likely saw around 3.7 trillion won in operating profit, down from 4.45 trillion won a year earlier but up from 3.2 trillion won in the previous quarter for foldable smartphone sales.

An estimated two million Galaxy Z Fold 3 and Z Flip 3 models have been sold in one month since their launch in late August, with South Korea topping sales followed by the United States, said Jin Park, senior research analyst at Counterpoint.

Market participants will be looking for Samsung’s full results later this month for an upgrade to its planned $17 billion US semiconductor plant after sources said it is nearing completion of construction.

HF

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