On Thursday,Samsung reported huge profits but they also warned about the things that won’t be so rosy in the coming months as smartphone competition ramps up and demand for memory chips slows.The South Korean conglomerate reported operating profit rose nearly 60% to 12.35 trillion won ($10.9 billion) for the July-September quarter compared to the same period last year. Analysts polled by data provider Refinitiv had predicted 11.1 trillion won ($9.8 billion) in operating profit.Samsung said sales for the third quarter rose about 6% to 67 trillion won ($59 billion). Analysts polled by Refinitiv had predicted 64.7 trillion won in sales ($57 billion).
Smartphone sales for the quarter were 29.81 trillion won ($26.3 billion), up 6% from the same period last year. That also represents a jump of 51% from the previous quarter, when the Covid-19 pandemic wreaked havoc on the smartphone industry. The sales bump suggests Samsung will soon retake its position as the world’s top smartphone seller from embattled Chinese rival Huawei.Content By IBMFintech is guiding banks into a new digital futureBut looking ahead, the company said it expects profit to decline in the fourth quarter, driven by weakening demand from server customers for memory chips. It added that it also expects smartphone sales to decline and marketing costs to increase because of the competitive market environment. Rival smartphone maker Apple (AAPL) launched its highly anticipated iPhone 12, its first 5G enabled device, this month.Shares in Samsung were last trading down 2.2% in Seoul, outpacing declines in South Korea’s Kospi (KOSPI).The earnings report comes shortly after the death of Lee Kun-hee — the business titan who led Samsung’s rise from a modest South Korean company to a multinational conglomerate. Lee died on Sunday at the age of 78.
Samsung chairman Lee Kun-hee dies after long illnessLee’s son, Lee Jae-yong, has been the company’s de facto leader since his father’s heart attack in 2014. Asked earlier this week about whether the vice chairman would take his father’s title as chairman, Samsung declined to comment.”While we assume JY Lee … will take the chairman’s role, we don’t expect a meaningful change in group ownership structure, management and business operation for Samsung in the short term given uncertainties from [an] ongoing trial issue and potential new regulation from the [South Korean] government,” analysts at brokerage firm Daiwa wrote in a note on Tuesday.