Samsung outpaces income estimates due to chip sales recovery

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On Tuesday, Samsung released preliminary results for its earnings in the fourth quarter of last year.

Notably, the South Korean conglomerate outpaced Wall Street’s income expectations. Jeon Kyung-dae, chief investment officer for Macquarie Investment Management Korea, attributed the firm’s resurgence to two factors. One, the corporation benefited from the recently signed U.S.-China trade deal. The executive also said the company experienced a recovery in its memory chip sales.

Samsung’s Preliminary Q4 Results

Samsung offered guidance that it generated $6.1 billion in operating income against $59 billion in sales in Q4 2019. As a result, the firm experienced a 34 percent drop in profits from the same period last year. However, Bloomberg reports most Wall Street firms expected the conglomerate to post $5.5 billion in operating income in Q4 2019.

Furthermore, Samsung improved its revenue generation 11.3 percent from Q3 2019.

Jeon Kyung-dae told Bloomberg the corporation’s financial performance improved due to relaxing international tensions and memory chip market recovery.

In the second half of 2018, the sector entered a period of protracted decline due to shirking demand. However, the release of popular new mobile devices and the 5G deployment has prompted smartphone makers and data centers to buy more components.

Indeed, global 32GB DRAM module prices only fell by 5.3 percent last quarter. Comparatively, in Q3 2019, the component’s experienced a 14 percent cost drop. Similarly, 128GB MLC NAND flash memory prices remained steady throughout the period ending December 31.

As the world’s biggest manufacturer of memory chips, Samsung’s ship has been raised due to the worldwide rising tide.

Samsung’s Improving Smartphone Business

Samsung does not disclose the performance of its segments when posting its preliminary quarterly results. However, Bloomberg predicts that the firm will reveal that it had lower than expected handset sales in Q4 2019. But sluggishness in that part of the company’s business is unlikely to persist into this year.

For one thing, the corporation is expected to debut a new foldable device and flagship handset at a February 11 event. Last month, The Burn-In reported the company’s Galaxy S10 successor device would feature a 108-megapixel camera and an ultrasonic fingerprint scanner. Similarly, Samsung’s second flexible smartphone will reportedly feature a display panel made of ultrathin glass.

Accordingly, the corporation will undoubtedly attract upgrade-ready consumers with its legitimately novel new device features. Indeed, Samsung claims it sold over 1 million units of its imperfect but fascinating Galaxy Fold.

Besides, the electronics maker managed to sell 6.7 million 5G-enabled mobile devices in 2019, despite the scattered deployment of the technology. This year, America’s wireless carriers will significantly expand their ultrafast mobile networks. As the conglomerate intends to release several new 5G smartphones this year, it could easily retain its position as the world’s biggest handset manufacturer.

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