Samsung Electronics Co expects third-quarter profit grew 5.6 percent, beating estimates, as a pickup in chip and display earnings likely offset the impact of a global smartphone recall that has roiled the tech giant.
The world’s biggest smartphone maker yesterday said in a brief filing that its operating profit for July to September was likely 7.8 trillion won (US$7 billion), compared with the 7.4 trillion won tipped by a Thomson Reuters StarMine SmartEstimate of analysts’ forecasts.
A year earlier operating profit was 7.4 trillion won.
Photo: AP
The firm will not issue full results until later this month and gave no details on the cost of recalling about 2.5 million Galaxy Note 7 phones after batteries caught fire.
Analysts have said the Note 7 woes could have undercut mobile earnings by at least 1 trillion won.
Revenue for the quarter likely fell 5.2 percent to 49 trillion won, the South Korean firm said, less than the Thomson Reuters StarMine SmartEstimate of 51.1 trillion won.
“Obviously the Note 7 recall costs were reflected, but [business] segments such as memory and OLED [organic light-emitting diode] displays did well and will probably continue to do so until at least next year,” IBK Asset Management fund manager Kim Hyun-su said.
Samsung’s semiconductor business is thriving as Apple Inc and peers boost the global market, seeking chips for new iPhones and other products launched ahead of the peak year-end sales season.
Ironically, the Note 7 problems could also boost Samsung’s chip business. Industry executives say the sudden need for chips in 2.5 million replacement phones is exacerbating already tight memory market conditions, which could push prices higher.
Paul Romano, chief operating officer at US-based electronic component distributor Fusion Worldwide, said the firm’s clients, which include Samsung, are currently having a harder time procuring memory chips.
Some smartphone makers are also trying to secure more of the chips as they see an opportunity capitalize on Samsung’s missteps and boost handset sales, he said.
“Sometimes this creates a seize mentality — everyone tries to manage the risk,” Romano said. “Often the response is to procure new product, trying to grab what’s left of a shrinking pile of supply.”
Researcher TrendForce Corp (集邦科技) says contract prices for DRAM chips — used in temporary data usage — will rise by more than 10 percent from this month to December. Demand is outpacing supply in the market for NAND chips used for long-term data storage during the third quarter, the researcher added, tipping prices to continue rising.
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