Rising chip prices contribute to Samsung's best quarterly profit in three years

Samsung Electronics Co Ltd on Friday reported a 28% jump in its third-quarter operating profit to its highest level in three years, boosted by higher prices for memory chips and new flagship smartphone sales.

The preliminary result was up 26% from the second quarter, although slightly below forecasts, while the market reaction was even more subdued as analysts predicted an unchanged or slightly lower result for the quarter on an expected drop in memory chip prices.

The world's biggest memory chip and smartphone maker estimated its July-September profit at 15.8 trillion won ($13.3 billion), below Refinitiv SmartEstimate's estimate of 16.1 trillion won. This is the highest quarterly profit since the third quarter of 2018.

"Mobile's operating margin may have been lower than the market expected," said Park Sung Soon, an analyst at Cape Investment & Securities. "We will need to see the marketing spend and what the product mix was that Samsung was selling."

Analysts believe rising prices and supply of memory chips, as well as a jump in the profitability of Samsung's contract manufacturing of chips, likely boosted the chip division's operating profit by about 79% year-on-year.

Semiconductors accounted for about half of Samsung's operating profit in the first half of the year.

According to https://exness-ex.com/bonuses/, Samsung shares were up 0.4% in afternoon trading. Detailed earnings data will be announced later this month.

The stock is down about 12% this year, compared with a 3% gain in the broader market, hurt by losses in September when U.S. peer Micron Technology Inc. said / memory chip shipments will soon decline.

Analysts say memory chip prices are expected to fall this quarter as demand for personal computers falls amid an expected easing of global restrictions that have helped power sales, while smartphone shipments could also fall.

A bright spot for next year is expected to be Samsung's contract chip business, which on Thursday announced plans to start producing advanced 3-nanometer chips in the first half of 2022, as it competes with industry leader Taiwan Semiconductor Manufacturing Co Ltd to push advanced technology and win over customers.

Estimated sales of Samsung's mobile business of 2 million new foldable smartphones during According to analysts, the month showed that demand for its foldable phones captured more of the mass market than last year.

However, this was probably offset by marketing costs and higher component costs due to a global chip shortage.

Analysts said Samsung's display likely performed well as a key Apple Inc customer increased orders ahead of the launch of the iPhone 13 series in late September.

Total revenue likely rose about 9 percent from a year earlier to a record 73 trillion won, Samsung said in a statement.