Samsung Electronics Co.’s has estimated profit to soar by more than 25 percent – the highest level in three years in the third quarter – thanks to rising prices for semiconductors and strong demand for its new Galaxy Z Flip 3, the tech giant’s foldable phone. The South Korean company is also expecting record sales but warned of an impending downcycle of semiconductors.
The upbeat earnings estimate from Samsung was allayed by analyst concerns that semiconductor chips would be in the midst of a downcycle.
The conglomerate posted operating profit of Won15.8 trillion ($13.2 billion) between July and September, up 28 percent from Won12.3 trillion a year earlier. The figure is slightly lower than the Won16.1 trillion estimated by analysts polled by Refinitiv.
Samsung Electronics’ sales rose 9 percent to a high of Won73 trillion, according to preliminary results released on Friday. It will provide net income and divisional breakdowns when it released final results on Oct. 28.
The world’s largest maker of smartphones and memory chips has strongly benefitted from a surge in demand as the global economy recovers from the ghastly pandemic. The ongoing chip crisis have pushed up prices of semiconductor chips, used in everything from smart cars to smartphones and the data centers powering cloud services worldwide.
Samsung Electronics Co. is also expanding its foundry operations to new applications in artificial intelligence (AI) and data center. On top of it, the company is also ramping up production of its mobile business to meet strong demand for its foldable smartphones. The Z series, launched in August, comes at a hefty price tag of more than $1,800. The electronics giant sold one million new foldable phones in Korea. It is the third highest selling product after its Note 10 and Galaxy S8.
Samsung shares rose 1% in Seoul, South Korea after the announcement.
The company’s latest earnings estimate came after Lee Jae-young, its vice-chairman and leader of the Samsung Group, came out of prison in August. Lee was released on parole after completing half of his two and a half year sentence. He was jailed for embezzlement, bribery and other offenses in connection with corruption scandal that brought down ex-Korean president Park Guen-hye.
