Rebound in memory chips lifts Samsung Electronics’ profit

30-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

Despite the global fallout from the COVID-19 pandemic, Samsung Electronics enjoyed handsome earnings in the third quarter of the year on the back of a solid performance from its memory chip business.

Although there was a decline in the average selling price (ASP) of such semiconductors, a key barometer gauging profitability, the company said Thursday that its solid earnings performance in this sector was due to healthy demand for mobile devices and PCs, which led to higher-than-expected shipments.

Its chip business also benefited from Huawei Technologies’ hurriedly-arranged pre-orders as the Chinese tech firm had aggressively procured memory chips from Samsung, SK and Micron of the United States before Washington’s new sanctions on it went into effect.

Samsung’s two other profitable lines ? phones and home appliances ? also saw improved sales during the third quarter from strong demand amid the pandemic.

Samsung Electronics reported 66.96 trillion won ($59 billion) in sales and 12.35 trillion won in operating profit during the latest quarter. Specifically, the company’s operating profit jumped 52 percent from the second quarter and 59 percent from a year ago.

It said the stronger sales of memory chips and consumer products helped the company log such an improved performance.

“Even as the COVID-19 pandemic continues around the world, the reopening of key economies led to significant increase in consumer demand. Samsung Electronics was able to respond aggressively through flexible global supply chain management, reporting its highest-ever quarterly revenue,” the company said in a statement.

Taking a look at the performance of each division, the device systems division posted an operating profit of 5.54 trillion won. “Overall demand in the memory business was better than expected as demand for mobile applications began to recover, even as demand for servers was somewhat weaker than the first half,” the firm said.

During a call to investors upon announcing the third quarter results, Samsung said its foundry business ? contract-based chip manufacturing for chip-designing firms ? posted an all-time high due to increased orders for high-performance computing chips and other applications.

The IT and mobile communications division posted 4.45 trillion won in operating profit as its smartphone sales “rose sharply from the previous quarter, with the launch of new flagship models such as the Galaxy Note20 and Galaxy Z Fold2, as well as stronger sales of mass-market models in key regions including India.”

The consumer electronics division, which oversees TVs and home appliances, saw a record 1.56 trillion won in operating profit as demand for the former surged due to stay-at-home restrictions.

However, Samsung Electronics said it expects its fourth quarter profits to decline amid weakening memory chip demand from server customers and intensifying competition in mobile phones and consumer electronics.

Smartphone sales especially are expected to decline due to subsiding effects from new flagship model launches and higher marketing expenditures to respond to intensified competition.


Category: Korea

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