Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Samsung Electronics' Q3 operating profit rebounds on solid phone sales
Pedestrians walk by a Samsung Electronics' posters in Seoul, displaying ads for the company's foldable smartphones, Wednesday. Yonhap
By Park Jae-hyuk
Q4 earnings forecast positive due to bright chip market outlook
Samsung Electronics' latest profit figures announced on Wednesday heralded the beginning of an earnings recovery with third-quarter operating profit estimated at 2.4 trillion won ($1.8 billion), far exceeding a market consensus of 1.8 trillion won. The tech giant’s quarterly operating profit had remained below 1 trillion won throughout this year.
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Thanks to the optimistic outlook, its stock price also jumped 2.71 percent during Wednesday’s trade, closing at 68,200 won.
Analysts attributed the earnings surprise to narrowed chip losses and strong performances by its mobile device and display divisions. Samsung has yet to disclose the specific earnings of each division. The company will release its final earnings figures on Oct. 31.
Announcing its earnings guidance, Samsung said third-quarter operating profit is expected at 2.4 trillion won, down 77.9 percent from the same period of 2022. Sales are estimated at 67 trillion won, down 12.7 percent year-on-year.
However, third-quarter operating profit and revenues jumped 258.2 percent and an 11.7 percent quarter-on-quarter, respectively.
Samsung’s smartphone and tablet shipments in the third quarter are estimated at 59 million and 5.9 million units, respectively, as the launch of new foldable smartphones in August significantly increased sales volume. The company also seems to have received large global orders for displays, as Samsung’s other major client, Apple, released the new iPhone last month.
Securities analysts estimated Samsung’s mobile device division to have achieved a third-quarter operating profit of around 3.2 trillion and 2 trillion won by its display division.
“The semiconductor division seems to have suffered around a 3 trillion won loss, which appears to have been offset by smartphone and display sales,” Hyundai Motor Securities analyst Roh Geun-chang said.
Samsung’s loss from its semiconductor business is expected to narrow in the fourth quarter, due to rising memory chip prices and decreasing inventory volume, according to securities analysts.
There is also a predominant view that the memory chip market has already bottomed out, which means Samsung Electronics will achieve an operating profit of over 3 trillion won in the fourth quarter. Some analysts expect the semiconductor division to achieve an operating profit of more than 10 trillion won in 2024 after suffering around 14 trillion won in annual losses this year.
“The direction of Samsung’s memory chip business depends on its plan that will be announced at a conference call later this month,” Meritz Securities analyst Kim Sun-woo said. “Amid expectations of a demand recovery, Samsung needs to express its intention to continue chip production cuts and reduce facility investments.”