- Third quarter operating income estimated at 16.1 trillion won
- Brisk sales of new foldable smartphones are driving results
- Sales are expected to reach 74.6 trillion won, a record high
SEOUL, Oct 6 (Reuters) – Samsung Electronics Co Ltd (005930.KS) is likely to post its best quarterly profit in three years and record sales on the back of soaring memory chip prices and brisk sales of its new foldable smartphones, analysts said. Estimates show.
Operating profit for the world’s largest memory chip and smartphone maker is likely to have risen to 16.1 trillion won ($ 14 billion) in the quarter through September, according to a refinitive SmartEstimate by 16 analysts that were weighted to those that are more consistently accurate.
That would be an increase of 30% from 12.35 trillion won in the previous year and the highest value since the third quarter of 2018. Revenue probably increased by 11% to 74.6 trillion won, a record high.
An unprecedented global semiconductor chip shortage amid the pandemic has underpinned Samsung’s results and stocks, which rose 45% over the past year and hit a record high in early 2021.
However, the stock has declined since then, compounded by losses in September when U.S. competitor Micron (MU.O) warned that its memory chip shipments would decline in the near future as the industry believes chip prices are past their July high -September will fall.
“Samsung shares have fallen on Micron’s predictions, but unlike Micron, Samsung is internalizing key components … and has other businesses like wireless and foundries to improve performance,” said Lee Soon-hak, analyst with Hanwha Investment & Securities.
“Memory (chip) prices will recover after a brief period of decline over the next year,” added Lee.
Samsung will announce preliminary results on Friday.
CHIP DEPARTMENT, SMARTPHONES
Samsung’s chip business is likely to report an operating profit of 9.9 trillion won, the average forecast by six analysts shows, a 79% year-over-year increase aided by rising memory chip prices and shipments.
Prices of DRAM chips used in servers, cell phones, and other computing devices rose 7.9% from the June quarter, while prices of NAND flash chips, which serve the data storage market, rose 5.5% rose, as data from research provider Trendforce shows.
Analysts are also forecasting double-digit operating margin for Samsung’s chip-to-order business as customers rush to secure their manufacturing capabilities.
The wireless division likely posted an operating profit of about 3.7 trillion won, analysts said, up from 4.45 trillion won last year but more than 3.2 trillion won on foldable smartphone sales in the previous quarter.
An estimated 2 million Galaxy Z Fold 3 and Z Flip 3 have been sold in a month since it launched in late August, with South Korea leading sales, followed by the United States, said Jene Park, senior research analyst at Counterpoint. Continue reading
Market participants will be browsing Samsung’s full results later this month for an update on its proposed $ 17 billion U.S. semiconductor factory after sources said they were closer to completing construction.
($ 1 = 1,187,9300 won)
Reporting by Joyce Lee; Editing by Himani Sarkar
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