LearnBonds.com

Samsung’s Q3 Profit Estimate Exceeds Expectations

Samsung’s Q3 Profit Estimate Exceeds Expectations
5 (100%) 8 vote[s]

Samsung Electronics reported a slightly higher expected profit for the third quarter than what they originally estimated. This was helped by the smartphone giant’s new product, the Galaxy Note 10. This profit was in spite of the slump they experienced in the memory chip market.

During a regulatory filing, ahead of a detailed profit report later this month, the South-Korea based electronics giant stated that their profits for the third quarter (The months July to September), would very likely clock in at 56%. In terms of money, that counts as 7.7 trillion won, or $6.44 billion.

This is a slightly better estimate than the 7.1 trillion won predicted by data given by Refinitiv SmartEstimate. This increase in profit is thanks to the massive sales of Samsung’s new flagship product: The Galaxy 10 series. It sold very well both in Europe and in their local market of South Korea.

Being the world’s largest smartphone manufacturer has its benefits, it seems. Samsung had sold over a million of the new 5G technology smartphones since its launch on August 23rd this year. This earned the Galaxy 10 series the title of the fastest-selling product Samsung has.

One Suffers, Other Gains

There is an old Dutch saying that translated, says that one man’s death is another man’s bread. Samsung is experiencing the bread of Huawei’s misfortune. As the US sanctions against China escalates, Huawei Technologies Co Ltd will effectively be barred from selling their smartphones to the third-largest country in the world.

Huawei’s Mate 30, their new smartphone, will be shipped to Europe within this month. However, the US sanctions have made Huawei incapable of using a licensed version of Google’s Android OS. Coupled with that, they won’t have several mobile services from the software giant. Things like Gmail, Youtube, Google maps, and its Play Store won’t be available to the Huawei smartphones.

Park Sung-soon, an analyst of Cape Investment & Securities, stated that Samsung would doubtlessly enjoy increased popularity as long as the sanction lasts. Furthermore, it could even lure people who moved from Samsung to Huawei, back to Samsung.

Chips Going Down

Even as Samsung is benefiting from the sanction against Huawei in terms of smartphones, the electronics giant is the world’s most prominent semiconductor firm in terms of revenue. The biggest buyer of Samsung’s memory chips happens to be Huawei itself.

That may have been okay on its own. However, critical data center consumers have started to slow down in their spending spree, and the global economy has weakened considerably. The more than two-year sales boom in the memory chip market has finally stopped — Samsung rakes in almost two-thirds of its profits from this sector.

Samsung has already stated that its revenue most likely fell 5.3% to 62 trillion won for the third quarter. That same number was 65.5 million won just a year ago.

Samsung’s smartphone industry only accounts for 20% of the electronics giant’s profit. This is making the lull they’re experiencing in terms of memory chips all the more worrisome.

Samsung, along with its memory chip rival SK Hynix, said they expect the market to pick up later in the year.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Ali Raza

Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.

Write first comment

Reply

Your email address is not published.