Samsung reports record earnings - and Apple’s a big reason why

Yolanda Curtis
October 7, 2018

According to earnings guidance released by Samsung Electronics on Friday, the Korean behemoth earned a consolidated operating profit of almost $15.5 billion from consolidated sales of $57.6 billion in the third quarter of the year, making it the company's most profitable quarter.

The company said that it expects its operating profit in the three months will stand at 17.5 trillion won (US$15.50 billion), up 20.4 percent from 14.5 trillion won posted during the same period past year.

Assuming those figures hold true, Samsung's profit will be around 20 percent higher than it was in the same quarter a year ago, and around 18 percent higher than the previous quarter. According to the guidance, Samsung Electronics expects consolidated sales for the third quarter of 2018 to be around $57.6 billion. Although the company has not detailed out income by segment in its guidance, industry watchers believe it would have raked in 13.5 trillion won from the chip business, accounting for nearly 80 percent of its entire operating profit and suggesting a slowdown in the business could directly hit its bottom line as early as the fourth quarter. Full results are due to be released on October 31.

A senior analyst in South Korea said that dropping chip prices are going to pressure profits while shipments of smartphones are not where they need to be and will continue crimping margins. Its smartphone business is struggling as sales of its flagship Galaxy S9 smartphone sales failed to reach expectations. Those chips help devices perform more than one task and are the company's main product related to memory.

While the liquid-crystal display (LCD) business revenue is estimated to have dropped 28 percent, OLED business is estimated to have increased 35 percent year-on-year to over 7.5 trillion won. Chip costs are diving, and its up and coming foldable telephones probably won't have an enormous effect on its mobile business. "[Samsung Electronics] is facing a slowdown on earnings momentum, as DRAM prices has been falling since the fourth quarter". The yield of the units is associated with higher prices for DRAM chips.

Construction and property group Chip Eng Seng Corp halted trading of its shares before the market opened yesterday after a late Thursday rally in its stock drew a trading query from the Singapore Exchange.

Other reports by iNewsToday