UPDATED 23:03 EDT / OCTOBER 30 2018

INFRA

Samsung’s memory chips drive another record quarterly profit, but slower times ahead

Samsung Electronics Co. Ltd. gave its investors plenty to think about today as it forecast weaker-than-expected earnings ahead shortly after posting a record operating profit in the third quarter.

Samsung reported an operating profit of 17.57 trillion won ($15.5 billion), up 21 percent from the same period a year ago. That was in line with an earlier forecast of 17.5 trillion won profits posted at the start of the month.

The company also reported consolidated revenue for the third quarter of 65.46 trillion won, up 5.5 percent from the year before.

Samsung is best known for being the world’s top manufacturer of smartphones and televisions, but its record profit came mostly down to the strong showing of its flash memory semiconductor products, which are used in data centers and smartphones. The company reported both stronger sales and higher yields than in previous quarters.

Overall, Samsung’s semiconductor unit saw its profit jump 37 percent, to 13.65 trillion won (around $12 billion). Revenue came in at 24.7 trillion won, up 24 percent. The unit has been the main driver of Samsung’s roaring success in the last couple of years. Samsung now sells more memory chips than any other company in the world, having surpassed Intel Corp. to become the largest semiconductor maker in terms of revenue earlier in the year.

“In the third quarter, operating profit reached a new quarterly high for the company driven mainly by the continued strength of the Memory Business,” the company said in a statement.

There was disappointment in store for investors regarding Samsung’s mobile business, however. The division reported operating profits of 2.2 trillion won ($1.94 billion), down 32 percent from a year ago. That was despite “solid” sales of higher-end smartphones such as the Galaxy S9 and S9 Plus, Samsung said. The main reason for the decline was due to flat sales of its mid-tier and low-end smartphones, plus a negative currency impact.

Samsung also warned shareholders to expect a less successful period in the fourth quarter, when it said it will face weak seasonal demand for its flash memory chips. As a result, the company expects its earnings to decline when it reports its fourth-quarter results in January.

Photo: DennisM2/Flickr

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