South Korean technology company Samsung is projected to experience a 27.6% increase in operating profit in the third quarter of this year. The increase in profits was driven by the emergence of the chip and folding phone business.
Financial data provider FnGuide Inc projects Samsung’s operating profit in the third quarter of 2021 will reach 15.8 trillion won, or $13.4 billion. “The figure exceeded market expectations with an increase of 27.6% year on year (yoy),” was quoted by Nikkei Asian Review on Monday (4/10).
FnGuide also estimates that Samsung’s revenue will also increase 9.3% to 73.2 trillion won during the third quarter of 2021. FnGuide derives Samsung’s profit and revenue forecasts from data from 22 brokerage firms.
Samsung will announce third quarter operating profit and sales this week (8/10). According to local media, Samsung will unveil its full report on revenue and net profit this month.
Song Myung-seob, an analyst at Hi Investment & Securities, said the operating profit was supported by increased sales of semiconductor chips. “This increase in profit is higher than our previous estimate,” Song said.
Demand for Samsung chips comes from the smartphone, laptop and game console industries. In recent months, corporate investment into data centers that require large numbers of servers has also increased. This triggers a high demand for memory chips.
The boom in Samsung’s chip business has also occurred in line with the shortage of chips since early 2021. This is due to the actions of former United States (US) President Donald Trump who included several Chinese semiconductor companies on a trade and security blacklist.
“This will keep demand for chips high and supply limited. We expect this scarcity to last until 2022 or 2023,” said Forrester Vice President Director Glenn O’Donnell as quoted by CNBC International, last May.
Apart from the boom in the chip business, Samsung’s profit was also boosted by sales of folding phones. According to a report by the Korean Herald, orders for the Samsung Galaxy Z Fold3 and Galaxy Z Flip3 foldable phones, which were launched in August 2021, have more than doubled the number of premium phones for the Galaxy S21.
Citing GSM Arena, more than a month after their release, the Samsung Galaxy Z Fold3 and Galaxy Z Flip3 have sold 1 million units in South Korea. That sales speed is similar to the Galaxy Note 10 and Galaxy S8 phones. So far, the Galaxy Z Flip3 is also the best-selling foldable phone in South Korea.
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