Samsung vows to renew mobile race with Apple
By Kim Yoo-chul
Upbeat about its third-quarter performance, Samsung Electronics is set to report even stronger results in the fourth quarter of this year, defying analysts' expectations that the Korean tech giant will end up with disappointing figures this year.
What is boosting the morale of Samsung is its rise in the booming smartphone segment. The depreciation of the local currency against the greenback as well as the stabilization of memory chip prices is also good news for the Suwon, Gyeong Province-based outfit.
``I am a little bit cautious, however. Samsung hopes to achieve the 150 trillion won revenue, 15 trillion won profit target this year. The smartphone business is now the key sector,’’ said a Samsung executive, asking not to be identified, Friday.
Last year, Samsung’s total revenue was 154.63 trillion won with an operating profit of 17.29 trillion won.
During the first nine months of this year, Samsung reported 117.42 trillion won in turnover with an operating profit of 10.9 trillion won.
``The 150 trillion, 15 trillion target looks quite challenging for Samsung but it should attain the goal thanks to the brisk sales of smartphones,’’ Kyobo Securities research center head Song Sang-hoon said.
Song said the releases of the Apple iPhone 4S is helping Samsung as the gadget failed to wow consumers.
``In terms of hardware-related specifications, the Samsung Galaxy is better than the Apple iPhone 4S in our view. There are just a few companies that can beat Samsung’s capacity, commitment and aggressive pricing,’’ Song said.
Samsung is believed to have another advantage in that its factories are located around the world powered by strong supply-chain management structures for on-time delivery.
In contrast, Apple doesn’t have manufacturing factories, which analysts say might be a potential problem in churning out its i-branded consumer gadgets.
Samsung said it expects third-quarter operating profit would be somewhere between 4 trillion won and 4.4 trillion won on sales of between 40 trillion won and 42 trillion won.
Samsung executives said it has begun overtaking Apple in terms of smartphone shipments from the third quarter, adding they don’t have big questions that Samsung will take over as the world’s biggest handset maker from the decades-long sector leader Finland-based Nokia by the end of the year.
Spokesman Shin Young-june declined to confirm.
``Samsung’s semiconductor business will see more profit in the fourth quarter partly because of the depreciation of the local currency against the dollar, though its LCD TV and LCD display businesses will end up this year with sluggish results,’’ said Kang Jeong-won, an analyst from Daishin Securities.
Smartphones and its chip business, which is the world’s biggest, will help the corporation create more revenue in the fourth quarter, according to Samsung officials.
Despite the continued legal tussle with Apple, the U.S. firm is seen to rely heavily on Samsung and its Austin, Texas, manufacturing operations for billions of dollars’ worth of chips.
``From Apple’s perspective, the risk of going with Taiwan Semiconductor Manufacturing (TSMC) is too high. No other foundry can match Samsung’s capacity commitment and process road-map,’’ said an analyst at Ashok Kumar with Rodman & Renshaw.
Apple had expressed interest in shifting more work to TSMC specifically the A6 mobile processor to be used in Apple’s next iPhone models. Samsung make the A5 chips Apple use in the iPhone 4S.
Local brokerages are expected to revise up their profit estimate on Samsung citing the bullish run in smartphones.
``We are mulling the possibility to revise up our view on Samsung profit in the fourth quarter. The just-released third quarter earnings guideline was far better than our estimates. That’s an earnings surprise,’’ said Lee Ka-keun, an analyst at HanaDaetoo Securities, adding the local brokerage believes Samsung smartphones will continue the current outstanding performances from developed to developing markets.