Samsung 58% profit jump beats forecasts as US sanctions hit rival Huawei

The South Korean tech giant said operating profit was likely 12.3 trillion won (S$14.45 billion) in the quarter ended September.
The South Korean tech giant said operating profit was likely 12.3 trillion won (S$14.45 billion) in the quarter ended September.PHOTO: REUTERS

SEOUL (BLOOMBERG, REUTERS) - Samsung Electronics reported earnings that beat analyst estimates after the South Korean tech giant's mobile and chip businesses benefited from US restrictions on Huawei Technologies.

The world's largest manufacturer of memory chips and personal electronics said on Thursday (Oct 8) that its third-quarter operating profit likely jumped 58 per cent. A recovery in smartphone sales and a rush order of chips from Huawei offset the effects of weak memory chip prices.

Operating income was likely 12.3 trillion won (S$14.45 billion) in the three months ended September, beating the 10 trillion won average of estimates.

Sales for the quarter were 66 trillion won, according to the preliminary results. The company didn't provide net income or break out divisional performance, which it will report later this month when it releases final results.

Huawei overtook Samsung to become the world's largest smartphone maker in the second quarter, but the Korean giant is projected to regain the crown after its Chinese rival lost access to the most advanced components that go into its Android devices.

Samsung is expanding its market share in India, where consumers are growing hostile to Chinese products because of geopolitical issues. Its memory business also benefited after Huawei stocked up on semiconductors ahead of American sanctions kicking in last month.

"Huawei has stocked about six months' worth of extra inventory before the US ban took effect on Sept 15," said MS Hwang, an analyst at Samsung Securities. "Huawei's purchases are offsetting weakness in server-use demand and are devouring market inventory, which should affect prices down the road."