Samsung brought in record-high foundry revenue in Q3

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Samsung Q1 2020 results.

October 29—Samsung revealed it made a record-high ₩18.8 trillion ($16.575 billion) in semiconductor sales during the third quarter via its latest financial report. In fact, the South Korean electronics giant generated its best-ever quarterly revenue in the three months ending in September.

Despite its recent success, the firm offered a measured holiday period forecast because of weakening demand and increased competition.

Samsung’s Blowout Q3 Performance

As mentioned in its Q3 preliminary results, Samsung reported ₩12.35 trillion ($10.88 billion) in operating profit last period. In addition to being an annual improvement of 58.7 percent, that figure represents the conglomerate’s highest quarterly earnings in two years. It also set a new record for revenue, with sales of ₩66.9 trillion ($58.97 billion).

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Samsung’s Q3 income levels reached such impressive heights because of a sharp rise in demand for its offerings. The company explained the reopening of certain regional economies allowed consumers to make previously postponed purchases.

The corporation’s foundry division benefited handsomely from the COVID-19 prompted spending spree. The unit generated historically high revenue and ₩5.54 trillion ($4.88 billion) in operating profit, a year-over-year jump of 81.63 percent. It attributed the surge to smartphone manufacturers ramping up production to meet renewed demand, and Huawei stockpiling chips to support its businesses in 2021.

That said, Samsung’s consumer electronics division saw the greatest boost from the post-pandemic buying trend. The segment experienced a 27 percent spike in sales, a development driven by homebound individuals upgrading their television sets. Similarly, the conglomerate’s mobile business grew by 6 percent because consumers snapped up its new mid-tier and premium handsets.

The vendor also benefited from the delayed launch of the iPhone 12. Since Apple did not deploy its flagship in September as usual, Samsung released its new high-end mobile devices without competition in key markets.

Measured Q4 Outlook

While still anticipating strong sales, the conglomerate expects its business to be less profitable in Q4.

The vendor foresees diminished interest from its server clients. The company posited its data center customers stocked up on the memory chips they need earlier this year. That inventory glut will result in fewer units sold at lower prices in this quarter. Nevertheless, it believes its foundry division will set another record in Q4 due to interest in its mobile DRAM and 5G system-on-a-chips (SoCs).

In particular, Samsung predicts robust purchases of its 5nm mobile memory components, which go on sale later this year.

It also predicts a drop off in smartphone purchases during Q4. The firm thinks sales of its latest flagships will wain as its rivals deploy their latest handsets. To compensate, the unit is increasing its market spending, which could boost revenue but will hurt profitability. On a related note, Samsung sees a drop off in consumer electronics profit in the holiday quarter due to higher production costs and greater competition.

On the bright side, the firm believes its display and appliance businesses will perform well in Q4.

Looking ahead to 2021, Samsung’s outlook remains restrained. At present, the company anticipates that semiconductor, television, smartphone, and appliance revenue will be high next year. But it expects a gradual recovery in demand. It also expressed concerns about the financial impact of the U.S.-China trade war and the new wave of rising coronavirus infections.

Ultimately, Samsung’s product diversity and reach will enable it to earn billions of dollars in this period and 2021. But it understands that marketplace is incredibly volatile, and its forecast reflects that reality. Under the circumstances, the conglomerate is wise to set measured expectations for its future performance.

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