Samsung Electronics posted a record-breaking quarterly revenue in the July-September period, buoyed by the strong performance of its device solutions and consumer electronics businesses, according to a regulatory filing Thursday.
The South Korean information technology giant enjoyed a quarterly revenue of 66.9 trillion won ($59 billion), up 8 percent on-year and breaking the previous record of 65.9 trillion won set in 2017. The company’s operating profit spiked 58.8 percent to 12.3 trillion won from a year prior, the best figure since the third quarter of 2018. Meanwhile, its net profit surged 48.8 percent to 9.3 trillion won in the same period.
In terms of profitability, Samsung Electronics yielded meaningful results, as the operating profit margin improved significantly to 18.4 percent compared to 15.4 percent in the previous quarter. Moreover, this is the first time Samsung Electronics recovered to the 10 trillion-won mark in operating profit since the fourth quarter of 2018, a year in which the company benefited from the super boom in the global semiconductors market.
Samsung Electronics’ device solutions division, which manufactures memory chips, registered 5.5 trillion won in revenue, higher than 5.4 trillion won from the previous quarter. Though chip demand from cloud and server companies weakened as they have already stocked up supplies to prepare for expansion amid the COVID-19 outbreak, the low demand was compensated by new releases of smartphones and game consoles, which also need chips. Huawei contributed to the sales as the Chinese company made massive prepurchases to prepare for US sanctions.
“The system LSI business (under the device solutions division) saw a recovery in demand for key mobile components and winning foundry contracts for high-performance computing chips from major clients improved the performance,” a company official said.
The company’s consumer electronics division saw its best-ever operating profit of 1.5 trillion won in the third quarter, more than double the division’s usual figure that falls between 500 billion won and 700 billion won.
“Economic stimulus packages from different countries and pent-up consumption in major countries spurred demand for TVs and consumer electronics significantly,” the company official said.
Meanwhile, the operating profit of its IT and mobile communications division jumped 52.4 percent to 4.4 trillion won on-year, over double from 1.9 trillion won in the second quarter. The staggering performance was possible as sales of the company’s strategic smartphones models -- the Galaxy Note20 and Galaxy Z Fold2 -- jumped nearly 50 percent. Also, the division was able to cut marketing costs significantly as offline promotion events were unavailable due to the pandemic.
But Samsung said its fourth-quarter profitability will inch down due to “weakening memory chip demand from server customers and intensifying competition in the mobile phones and consumer electronics sectors.”
Smartphone sales will also likely suffer due to increasing market costs from the competitive market environment, it added.
The demand for server memory will start to turn around in the first half of next year, the company predicted, although uncertainties remain over a potential resurgence of COVID-19.
By Kim Byung-wook (email@example.com