samsung electronics

Samsung Reports Best Quarterly Profit in 3 Years Amid an Increase in Chip Prices

Samsung Electronics reported a 28 percent rise in its third-quarter operating profit. The increase in chip prices has made the company register the highest profit in this third quarter in three years.

The largest smartphone and semiconductor chip maker has estimated its July-September profit to be KRW 15.8 trillion.   

An analyst at Cape Investment & Securities said that the operating margin in the mobile business has been lower than anticipated.

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The analyst, Park Sung-soon, reportedly said, “The mobile business’ operating margin might have been lower than the market expected.” He also added, “We will have to see marketing costs and what the mix of products Samsung sold was like.”

They are looking into the marketing costs to identify the products Samsung sold during the quarter.

The rising prices of chips, shipments, and a jump in profitability at the chip contract manufacturing business unit of Samsung is currently being anticipated to be the reason why the operating profit received a boost by about 79 percent from a year earlier. 

Semiconductors accounted for half of the operating profit of the company in the first half of the year.

The company’s stock has fallen by about 12 percent so far this year versus the 3 percent rise in the wider market hurt by losses experienced in September when Micron made an announcement that it global shipments of memory chip would slip in the near term.

Analysts have further predicted that memory chip prices are anticipated to tumble with drop in the demand for personal computers.

A delay in smartphone shipments has also been anticipated by the market experts. However, Samsung’s chip contract manufacturing business seems to have a bright spot in the future as it announced its plan to start its production of cutting-edge nanometer chip designs in the first half of 2022.

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Samsung estimated to make a sale of 2 million new foldable smartphones within a month which hints at the increase in demand for its foldable handsets.

However, it was offset by the higher component costs and marketing costs due to the shortage of semiconductor chips globally. The display units also saw remarkable results before Apple launched its iPhone 13 series recently.