SEOUL, Oct. 31 (Korea Bizwire) — Samsung Electronics Co. on Tuesday said its third-quarter net profit more than doubled on-year, mainly led by strong returns from its chip business amid an industrywide boom.
Net profit came to 11.1 trillion won (US$9.87 billion), jumping from 4.53 trillion won posted a year earlier, the company said through a regulatory filing.
Operating profit came to 14.53 trillion won in the July-September period, also rising sharply from 5.2 trillion won posted last year. The figure met the estimate of 14.5 trillion won announced by Samsung in a guidance report earlier this month.
Sales also advanced 29.7 percent to reach 62 trillion won over the cited period, the company added.
The company’s operating margin came to 23.4 percent in the third quarter, significantly rising from 10.9 percent posted a year earlier. The figure indicates Samsung made 23.4 won per every 100 won in sales.
Samsung Electronics said its chip business raked in a record operating profit of 9.96 trillion won, helped by the rising seasonal demand. Its products’ prices increased due to limited supply in the market.
The company said demand meant its dynamic random-access memory (DRAM) products did especially well.
For the fourth quarter, Samsung said the shipment of its products is expected to continue growing, as more mobile devices are adopting high-end memory chips and demand from data centers rising.
“Looking to 2018, high demand from data center infrastructure expansion is forecast to continue while demand for contents growth in mobile products will rise on the widespread adoption of dual camera, 3D sensors and on-device AI offerings,” Samsung Electronics said.
The tech giant added that the IT and Mobile Communications division, which covers smartphones, posted an operating profit of 3.29 trillion won, improving from 100 billion won posted a year earlier, when the handset business was hurt by the suspended production of the Galaxy Note 7.
The company, however, said while its shipment of smartphones in terms of units remained strong due to the release of the Galaxy Note 8 and robust sales of the Galaxy J series, the rising portion of budget models in the portfolio led to a decrease in earnings from 4.06 trillion won posted a quarter earlier.
During its meeting with investors, Samsung Electronics said it sold 97 million units of handsets in the July-September period, expanding from 93 million units posted in the second quarter. Smartphones accounted for 80 percent of its shipments of handsets, it added.
Industry watchers said the mobile arm’s performance is still better than expected, as the business was widely seen to remain sluggish due to increasing expenditure on marketing projects for the Galaxy Note 8.
Preorders for the Galaxy Note 8 in South Korea came to 850,000 units, more than doubling the 400,000 units posted by its predecessor, the Galaxy Note 7.
Experts said Samsung’s fourth-quarter performance is also anticipated to improve on the full-fledged sales of the Galaxy Note 8.
The South Korean electronics company said it expects tougher competition in the market for the fourth quarter, saying it will release the new phablet in more countries in order to maintain sound returns.
Samsung said it also plans to improve profitability of budget smartphones by adopting more efficient production procedures.
The display panel business posted an operating profit of 970 billion won in the third quarter, mainly attributable to strong sales of flexible panels.
The consumer electronics division posted an operating profit of 440 billion won. Samsung said the performance falls behind the 790 billion won posted a year earlier due to changes in TV panel prices, although the increased shipments of premium products led to an on-quarter rise.
Samsung Electronics said facility investment for this year will reach a record-high of 46.2 trillion won, rising sharply from 25.5 trillion won posted in 2016.
Expenditure for its semiconductor and display businesses will be 29.5 trillion won and 14.1 trillion won, respectively, the company said.
Samsung said it spent a combined amount of 10.4 trillion won over the third quarter, with the chip taking up 7.2 trillion won and the display arm 2.7 trillion won.
The company said the investment is focused on expanding the production capacities of its Pyeongtaek-based facilities to meet the rising demand for V-NAND products and improving DRAM production processes. It plans to expand the production of flexible OLED panels.