Samsung expects profit to fall on weak chip demand after strong Q3 earnings

Samsung, the world’s top maker of smartphones and memory chips, posted a 59 per cent jump in operating profit in the July-September quarter

But it says it expects fourth-quarter profit to fall due to weak server chip demand and rising smartphone competition

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Samsung, the world’s top maker of smartphones and memory chips, says it expects fourth-quarter profit to fall due to weak server chip demand and rising smartphone competition. Photo: EPA-EFE

Published: 10:01am, 29 Oct 2020Updated: 10:06am, 29 Oct 2020

Samsung Electronics said on Thursday it expects fourth-quarter profit to fall due to weak server chip demand and rising smartphone competition, after posting its best quarterly operating profit in two years in the third quarter.

The world’s top maker of smartphones and memory chips posted a 59 per cent jump in operating profit in the July-September quarter, on the back of its highest quarterly smartphone profit since 2014 at 4.45 trillion won (US$4 billion).

A near 50 per cent jump in sales of smartphones likely reflects gains in Samsung’s share of the market as US restrictions hit Chinese rival Huawei Technologies, analysts said.

Lower marketing costs amid the coronavirus pandemic were also a likely factor, analysts said.

Samsung said its chip profit surged 82 per cent to 5.54 trillion won from a year earlier, as higher sales of low- and mid-end smartphones and inventory build-up from Huawei ahead of the US restrictions offset weak demand from servers.

Samsung’s display business, which counts Apple among its customers, said its operating profit fell from a year earlier because of delays of new model launches by a major customer.

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