Chips Boost Samsung Profit Forecast

Samsung’s earnings guidance for Q3 has exceeded analyst forecasts, with the performance of its semiconductor division offsetting a weaker showing in smartphones.

At an event in Seoul on the 7th October, Samsung said that its operating profit for the quarter is expected to be KRW7.3 trillion ($6.3 billion): a 78% increase from the KRW4.1 trillion ($3.5 billion) of Q3’14.

The results reflect a renewed focus on the semiconductor business; this was partly boosted by the weakness of the Korean won compared to the US dollar – the currency used for most of Samsung’s semiconductor sales. The smartphone division, however, tends to have component costs denominated in dollars, and sales in local currencies.

Samsung’s change of focus has seen the company supplying its Exynos chips – previously reserved for its own premium phones – to other firms, such as China’s Meizu. The company has also been selling display components, such as curved AMOLED screens, to other smartphone makers.

Korean analysts such as Nomura have said that they do not expect Samsung’s smartphone profit to rebound until at least 2017 – which the company is targeting for the launch of its foldable phones.