{"id":84538,"date":"2020-10-08T11:00:01","date_gmt":"2020-10-08T08:00:01","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/samsung-flags-near-60-operating-profit-jump-after-huawei-boost\/"},"modified":"2020-10-08T11:00:01","modified_gmt":"2020-10-08T08:00:01","slug":"samsung-flags-near-60-operating-profit-jump-after-huawei-boost","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/samsung-flags-near-60-operating-profit-jump-after-huawei-boost\/","title":{"rendered":"#Samsung flags near-60% operating profit jump after Huawei boost"},"content":{"rendered":"

“#Samsung flags near-60% operating profit jump after Huawei boost<\/strong>”<\/p>\n

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\"Samsung
\n Samsung Electronics is crucial to South Korea’s economic health
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Samsung Electronics flagged a leap of nearly 60 percent in third-quarter operating profits Thursday, as its mobile and chip business were boosted by US sanctions against its Chinese rival Huawei.<\/p>\n

The South Korean tech giant said in an earnings estimate that it expected operating profit to reach 12.3 trillion won ($10.6 billion) for July to September, up from 7.8 trillion won in the same period last year.<\/p>\n

The prediction would represent the firm’s biggest operating profit of any quarter for two years and was also ahead of analyst forecasts.<\/p>\n

Samsung Electronics is crucial to South Korea’s economic health. It is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled conglomerates known as chaebols that dominate business in the world’s 12th-largest economy.<\/p>\n

Its overall turnover is equivalent to a fifth of the country’s gross domestic product.<\/p>\n

James Kang, senior analyst at Euromonitor International Korea, said Samsung’s rollout of its latest premium handset devices\u2014the Galaxy Note 20 and the Galaxy Z Fold 2\u2014in August, coupled with strong sales of mid-range phones, led the firm’s third-quarter performance.<\/p>\n

A Washington ban on foreign companies providing Huawei with US-origin technology<\/a>, that came into effect on September 15\u2014cutting off essential supplies of semiconductors and software needed for making smartphones and 5G equipment\u2014also provided a boost.<\/p>\n

Kang Min-soo, an analyst at Counterpoint Research, said US sanctions against Huawei were becoming “a big factor” affecting the global smartphone market.<\/p>\n

“For Samsung, it will be a good opportunity to increase market share in Europe, where it has been competing with Huawei in various price bands,” he added.<\/p>\n

The firm’s memory business also benefited from the feud after Huawei rushed to stock up on Samsung-made semiconductors before the US restrictions kicked in.<\/p>\n

“Huawei has stocked about six months’ worth of extra inventory before the US ban took effect on September 15,” MS Hwang, an analyst at Samsung Securities, told Bloomberg News<\/a>.<\/p>\n

“Huawei’s purchases are offsetting weakness in server-use demand and are devouring market inventory, which should affect prices down the road.”<\/p>\n

‘New lows’<\/b><\/p>\n

But analysts said falling chip prices could put a damper on Samsung’s performance in the final quarter of the year.<\/p>\n

Samsung is the world’s biggest manufacturer of memory chips and led the DRAM market with a 43.5-percent share in April-June, according to market researcher TrendForce.<\/p>\n

Server DRAM chips enjoyed a boost as the pandemic prompted working from home and online classes\u2014but were now experiencing “significant oversupply”, it said in a report.<\/p>\n

“Therefore, contract prices of server DRAM products continue to descend to new lows,” it went on, forecasting a 13-18 percent drop in the fourth quarter.<\/p>\n

Despite the optimistic forecast, Samsung Electronics shares closed down 0.3 percent on Thursday.<\/p>\n

Shares in LG Electronics, South Korea’s second-largest app<\/a>liance firm after Samsung, also closed lower Thursday, down 2.9 percent, despite forecasting third-quarter operating profits would jump 22.7 percent on-year to 959 billion won, a record for any quarter.<\/p>\n

Samsung withholds net profit and sector-by-sector business performance data until it releases its final earnings report, expected later this month.<\/p>\n

Adding to the company’s challenges, vice-chairman and de facto leader Lee Jae-yong is being retried over a sprawling corruption scandal that could see him return to prison. <\/p>\n

He is not being held in custody during the proceedings, but a guilty verdict could deprive the firm of its top decision-maker.\n <\/p>\n\n

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Samsung Electronics forecasts profits jump despite virus\n <\/p><\/div>\n

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\n \u00a9 2020 AFP<\/p>\n

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Citation<\/strong>:
\n Samsung flags near-60% operating profit jump after Huawei boost (2020, October 8)
\n retrieved 8 October 2020
\n from https:\/\/techxplore.com\/news\/2020-10-samsung-flags-near-profit-huawei.html<\/p>\n

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