ibusinesslines.com November 15, 2018

Samsungs Q3 operating profit up 20.4 pct to hit record high

07 October 2018, 04:41 | Jodi Jackson

Samsung is still snagging record profits despite slowdown in smartphone sales. Sarah Tew CNET


Sales from Samsung's chip division are creating big business for the Korean company - which of course, had a challenging Q2 due to the Galaxy S9 smartphone failing to deliver its expected profit growth.

Song Myung-sup, a senior analyst at HI Investment & Securities, expects DRAM chip prices to slide about 5 per cent in the fourth quarter from the previous quarter, while NAND chip prices are seen dropping 10 per cent. This means that the third quarter of 2018, a record for Samsung.

Samsung shares rose as much as 1.8 per cent in early trading in Seoul.

The operating profit to sales ratio came to 26.9 percent, also marking a record high for the company.

Samsung, the world's largest smartphone maker, is suffering "a slowdown in many markets" compared with the same quarter previous year, said TuanAnh Nguyen, an analyst at research firm Canalys.

Chips account for almost 80 per cent of Samsung's operating profit and Samsung has benefited from a surge in data centres for cloud computing that has spurred spikes in prices for DRAM chips.

Analysts have been warning about slowing demand and a subsequent drop in prices for some memory chips, the business that drove a year-long streak of record profits at Samsung.

A worldwide recall of its Galaxy Note 7 devices over exploding batteries in 2016 cost the company billions of dollars.

Samsung is also facing mounting competition from Apple and Chinese rivals and is looking for ways to boost momentum in a sluggish smartphone market.

If that turns out to be the case, the next objective for Samsung is to ensure its mobile division proves as profitable.

Nevertheless, analysts have sounded concern about the current lack of innovation in the smartphone industry.

But its growth has been overshadowed by corporate scandal at the South Korean behemoth.

Samsung's reputation was dealt a blow by the bribery conviction of Lee Jae-yong - the son and heir of the group's current chairman Lee Kun-hee.

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