Samsung flags record third-quarter operating profit

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Apple Inc's (NASDAQ:APPL) biggest smartphone competitor Samsung Electronics Co Ltd expects to post record quarterly profit, boosted by strong demand for its memory chips.

LG Electronics said on October 5 its third-quarter operating profit moved up 44.4 percent on-year. Preliminary operating profit jumped by over 20% to 17.5 trillion won or $15.5 billion thanks to a gain of 4.8% in revenue that was in line with expectations of analysts.

That would beat operating profit growth of 6 per cent in the previous quarter when its Galaxy S9 device missed sales targets and competition from cheaper Chinese-made phones ate into margins for its mobile business.

The company did not provide detailed performance data for each division. The revenue is an over 20 per cent increase (year on year) and almost 12 per cent high from the first quarter of this year, apparently on the back of robust returns from its chip business.

Koh added that Samsung was close to concluding the development of a foldable smartphone and would be ready to unveil it this year.

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Beyond smartphones and memory chips, another reason Samsung's earnings were so hot last quarter was because South Korea was so hot - literally. Those chips help devices perform more than one task and are the company's main product related to memory.

LG, in a regulatory filing, estimated July-September profit at 746 billion won ($659.76 million). The division has been posting losses since the second quarter of 2017.

The company's dependency on its semiconductor's business is becoming an increasingly large concern. In particular, the memory chips and display business continue to do well.

Samsung doesn't release the performance figures of its individual divisions until later this month-it will certainly be interesting to find out how the Galaxy Note 9 has been performing. However, falling prices for some electronic components could stunt further earnings growth.

Song Myung-sup, a senior analyst at HI Investment & Securities, expects DRAM chip prices to slide about 5 per cent in the fourth quarter from the previous quarter, while NAND chip prices are seen dropping 10 per cent.

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