Samsung's third-quarter profit estimate exceeds expectations on smartphone sales

Samsung's third-quarter profit estimate exceeds expectations on smartphone sales

Samsung's third-quarter profit estimate exceeds expectations on smartphone sales

Samsung's trading update on Tuesday gave estimates for operating profit and revenue only.

The disappointing Q3 numbers are hardly any different from Q1 when Samsung Electronics reported even worse results.

"As inventory de-stocking cycles end at major customers, we expect the memory industry to enter a recovery stage in 2020, while the magnitude of recovery will be more gradual (especially for DRAM) relative to previous upturn cycles", JP Morgan said in a 3 October note.

There are also early signs that the global memory chip business, a key driver of Samsung's profit, will stabilize next year after prices were eroded by a weak global economy and slower spending by key data center customers.

The South Korean technology giant estimated an operating profit of 7.7 trillion won ($6.4 billion) for the July-September quarter, which would be a 56.2 per cent drop from the same period previous year.

Samsung has also struggled with declining prices for memory chips, a market which is responsible for two thirds of the company's profits.

Samsung, the world's largest producer of mobile phones and smartphone displays, is benefiting from solid demand for its Note10 and for Apple's iPhone 11 Pro, which uses the company's OLED displays.

The tech giant estimated its overall sales increased ten-point-five percent on-month, but fell five-percent-three percent on-year to 62 trillion won in the cited period.

Samsung's display business unit is believed to have racked up an operating income of 1 trillion won on the back of increased shipments of smartphones and high-end displays.

Samsung's full earnings report will offer us a chance to take a closer look at various different parts of the company, though.

"The strong smartphone sales has limited ability to fix all Samsung's issues", said Park Sung-soon, an analyst at Cape Investment & Securities.

Samsung will provide more details about its various businesses when it releases its final figures later this month. "Packaging technology that secures all of the intricacies of ultra-performance memory is becoming tremendously important, with the wide variety of new-age applications, such as artificial intelligence (AI) and High Power Computing (HPC)", said Hong-Joo Baek, executive vice president of TSP (Test & System Package) at Samsung Electronics.

The news comes at a good time for the world's larger maker of smartphones, which, like Apple, has been experiencing falling sales in recent quarters.

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