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Samsung Electronics Co reported earnings that beat analyst estimates after the South Korean tech giant’s chip and mobile businesses benefited from US restrictions on Huawei Technologies Co.
The world’s largest maker of memory chips and personal electronics posted operating revenue of 12.3 trillion won ($ 10.6 billion) in the three months ending in September, beating the estimated average of 10 trillion won.
Sales for the quarter were 66 billion won, according to preliminary results released Thursday. The company did not provide net income or break down the performance of the divisions, which it will report later this month when it publishes the final results.
The shares rose as much as 1.3% in Seoul on Thursday.
Huawei surpassed Samsung to become the world’s largest smartphone maker in the second quarter, but the Korean giant is projected to regain the crown after its Chinese rival lost access to the most advanced components of its Android devices.
Samsung is expanding its market share in India, where consumers are becoming hostile towards Chinese products due to geopolitical issues. Its memory business also benefited after Huawei sourced semiconductors before US sanctions that began last month.
“Huawei has stockpiled additional inventory for approximately six months before the US ban went into effect on September 15,” said MS Hwang, an analyst at Samsung Securities.
“Huawei’s purchases are offsetting weaker demand for server usage and are eating up market inventory, which should affect prices going forward.”
With the launch of Apple Inc.’s iPhone 5G delayed until October and Huawei waned, Samsung has had an unusually easy quarter in terms of mobile competition. Even so, the company significantly improved profitability thanks to lower marketing expenses during the pandemic.
“We see their margins going up in 2021 as Huawei continues to struggle,” said Lee Su-bin of Daishin Securities, adding that Samsung will benefit from the rapid roll-out of 5G and its new focus on foldable phones.
He forecasts that Samsung will report about 80.6 million smartphone shipments for the third quarter, a 49% increase from the second quarter.
Samsung’s product mix ranges from the $ 1,999 Galaxy Z Fold 2 to the mid-range Galaxy A series, to streamlined folding phones.
Demand for mobile memory chips may increase slightly in the fourth quarter as Apple’s iPhones arrive and Chinese rivals Oppo and Vivo increase orders to try to secure some of Huawei’s market share, according to Song Myung. sup, analyst at HI Investment & Securities. .
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