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Samsung Profits Fall 23% As Chips Pile Up

Samsung enjoyed record third quarter revenue but weak demand for memory chips, mobile phones and TVs saw operating profits drop 23 per cent.

Total consolidated revenue was a record for the third-quarter at A$83.7 billion, with operating profit declined 23% from the previous quarter to A$11.8 billion.

The biggest hit came to its chip business, which fell by 14 per cent, with revenue of 23 trillion won (A$24.95 billion) missing Wall Street estimates of 35 trillion won (A$38.1 billion) by a wide margin.

“Under continued macro uncertainties, scale of customers’ inventory adjustments exceeded market expectations, and demand for consumer products continued to weaken,” the company said in a statement.

“As a result, bit growth missed guidance and our sales result declined.”

Part of this comes from Samsung’s increase in chip spending, in the face of declining demand.

Samsung’s Foundry Business achieved its highest ever quarterly revenue and operating profit in the third quarter, thanks to “steady improvements in advanced process yield and increased revenue contributions.”

“Following the shipment of the world’s first mass-produced 3-nanometer GAA, Samsung further strengthened its technology leadership by presenting next-generation 2-nanometer and 1.4-nanometer roadmaps,” the company explains.

Samsung Display Corporation also saw record revenue for the mobile panel business (A$10.2 billion, with $2.15 billion operating profits), citing increased demand following the release of new flagship smartphones including Samsung’s popular range of foldables.

epa08111353 The Samsung flag waves outside the Samsung Electronics Co.’s headquarters in Seoul, South Korea, 08 January 2020. Samsung estimated its operating income plunged 52.9 percent on-year to 27.7 trillion won (23.5 billion US dollar) in 2019, mainly due to a protracted slump in chip prices. EPA/YONHAP SOUTH KOREA OUT

“The Company’s business strategy, which concentrates on premium OLED products led to the record-high quarterly earnings,” Samsung explained.

The large panel business, however, suffered a loss. Sales of QD-OLED products continued to rise, however initial investment costs of QD-OLED caused continued loss.

The company Mobile Xperience arm posted A$35.1 billion in revenue, and an operating profits of A$3.5 billion. Both figures were up from the previous quarter, driven by new smartphone and wearable launches.

“Sales of the Galaxy Z Fold4 and Z Flip4 showed strong growth compared with the previous models, despite a challenging market environment,” Samsung explains.

“The Galaxy S22 series, launched in the first half, also maintained solid sales momentum, posting significant revenue growth from a year earlier.”


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