Samsung flags record third-quarter operating profit

Florence Fletcher
October 7, 2018

The company said its operating profit will come in at around 17.5 trillion won ($15.8 billion), a 20 percent increase from the year-ago period.

However, sharp drops in price for certain chips have brought its two-year super cycles of limited supply and surging demand to an end, and industry analysts expect the quarter for July through September to mark a peak in the tech giants earnings. The previous record was 15.6 trillion won achieved in the first quarter of 2018.

Samsung Electronics is forecast to post a record operating profit in the July-September period thanks to its robust semiconductor sales, according to the firm's earnings guidance on October 5.

"While the third quarter guidance report is positive in that it exceeds earlier market consensus, heavy dependency on semiconductor performance is a negative [for Samsung Electronics]", said Kim Yang-jae, analyst at KTB Investment & Securities.

Even though the detailed report will be out later, analysts believe that the earnings boost is largely because of the strong performance of the components arm of Samsung.

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Beyond smartphones and memory chips, another reason Samsung's earnings were so hot last quarter was because South Korea was so hot - literally.

For 2018, the company is forecast to earn operating profits of 65 trillion won, well north of the 53.6 trillion won from 2017, Yonhap reported. Its smartphone business is struggling as sales of its flagship Galaxy S9 smartphone sales failed to reach expectations. The projected sales are KRW 64-66 trillion, which equates to around $57.5 billion. Chip costs are diving, and its up and coming foldable telephones probably won't have an enormous effect on its mobile business. The yield of the units is associated with higher prices for DRAM chips.

As of 10:07 a.m. on Friday, shares of Samsung Electronics were up 0.56 percent to 44,950 won.

Price for memory chip, Samsung's best-selling product, was forecast to fall in the fourth quarter, while uncertainties lingered over the overall export amid the trade conflict among major economies.

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