Samsung Q3 earnings beat profit estimates on strength of smartphones and displays

Bloomberg

Samsung Electronics Co posted better-than-expected earnings and projected a gradual recovery in the memory chip market in 2020 as fifth-generation wireless technology rolls out globally.
Shares in South Korea’s largest company climbed as much as 2% after it posted net income of 6.1 trillion won ($5.2 billion) for the September quarter, surpassing the 5.5 trillion won average of projections. Samsung, which reported a 56% slump in operating profit earlier this month, said it expects memory chip demand to gradually climb out of its funk in the fourth quarter and bounce back next year. The company foresees capital spending of 29 trillion won in 2019, about the same level as it was last year.
Memory chip prices have stabilised and risen in part for seasonal reasons and in part because clients are buying to hedge against global macroeconomic uncertainty, said Samsung.
Chipmakers such as SK Hynix Inc have recently said the industry is bottoming out and is now on the verge of an upturn thanks to the adoption of new technologies such as fifth-generation networking.
Samsung shares rose on expectations of profit improvement “We are seeing an improvement in the chip industry,” Kim Woon-ho, an analyst at IBK Securities Co, said in an October 22 note.
“It is expected that the DRAM prices will start to recover in the third quarter of 2020. We project a big jump in demand for server chips, while Fold models will become a new factor.”
Samsung’s semiconductor profit will likely keep falling through early next year, despite optimism surrounding an upturn in the memory cyclem Anthea Lai, TMT analyst said.
Samsung’s smartphone business, which has weathered a series of setbacks in recent years, remained strong in the quarter, accruing 85 million unit sales in the third quarter.
The troubles faced by rival Huawei in international markets have helped bolster Samsung’s mobile sales, with Counterpoint Research indicating that Samsung is absorbing Android users in Europe, South America and the Middle East.