Samsung predict near-80pc profit rise due to strong chip sales

7 Oct 2015

It appears that, at least for some aspects of the business, Samsung is doing well, financially, as the company predicts its Q3 earnings will show a rise in profits of 78pc thanks to its thriving semiconductor business.

The woes of Samsung’s smartphone business have been well-documented, painting the company as one that is simply struggling to compete – not only with Apple, but with other Android phones – despite significant spending on new flagship phones like the Samsung S6 Edge.

However, according to the Financial Times, Samsung’s shares have jumped by 7pc following the news that it expects to have an operating profit of 7.3trn won (€5.6bn) for Q3, compared with 4.1trn won (€3.1bn) at the same time last year.

If so, this would trump market analysts who have predicted that Samsung’s operating profit will be closer to 6.7trn won.

While its semiconductor business is largely credited with the turnaround in fortunes, it should also be noted that the weakening of the South Korean won compared with the US dollar has also been instrumental in helping boost sales.

However, the weakening of the won also had a detrimental effect on Samsung’s smartphone sales, as manufacturing costs and the cost of building phone components are typically considered in terms of the dollar, rather than the won.

South Korean market analysts believe it will be some time yet before Samsung can begin turning its smartphone business around, with estimates putting a return to significant profits in the division sometime after 2017.

In the meantime, Samsung has begun looking at selling some of its technology to third-parties. The company agreed last July to begin selling its curved screens to other manufacturers, despite the screens being the only feature that makes Samsung stand out in a crowded market.

Samsung promotional display image via Shutterstock

Colm Gorey was a senior journalist with Silicon Republic