Samsung profit jumps 58% to two-year high as US sanctions hit rival Huawei


SEOUL – Samsung Electronics flagged earnings that beat analyst estimates after the South Korean tech giant’s mobile and chip businesses benefited from US restrictions on Huawei Technologies.

The world’s largest manufacturer of memory chips and personal electronics said on Thursday (Oct 8) that its third-quarter operating profit likely jumped 58 per cent. A recovery in smartphone sales and a rush order of chips from Huawei offset the effects of weak memory chip prices.

Operating income was likely 12.3 trillion won (S$14.45 billion) in the three months ended September, beating the 10 trillion won average of estimates.  It would be the highest since the 17.57 trillion won of the third quarter of 2018.

Sales for the quarter were 66 trillion won, according to the preliminary results. The company didn’t provide net income or break out divisional performance, which it will report later this month when it releases final results.

Revenue likely rose 6 per cent from the same period a earlier to 66 trillion won, the company said.

Samsung released only data in Thursday’s regulatory filing ahead of the release of detailed earnings figures later this month.

“It seems Huawei’s impact on Samsung’s chip business was bigger than the market expected, and there was a big surprise in the smartphone and home appliance businesses,” said CW Chung, head of research at Nomura in South Korea.

Samsung’s share price rose 1.2 per cent in morning trade, outperforming the benchmark Kospi’s 0.7 per cent rise.

The firm’s smartphone shipments jumped to around 80 million handsets from 54.2 million in the previous quarter after demand rebounded from a contraction brought about by the Covid-19 pandemic in the first half of 2020, analysts said.

While weaker memory prices pressured Samsung’s overall chip business, analysts said shipments got a boost from orders for graphics chips for games consoles as well as orders for mobile chips, including from Chinese smartphone maker Huawei.

Huawei had been building stockpiles before US restrictions from mid-September prevented it from buying chips made using US technology without a license, industry sources have said.

Samsung’s home appliance business also likely got a lift from the pandemic which spurred consumers to spend more on products that make their homes cleaner, analysts said.

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