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Samsung Electronics’ operating profit grows 58% due to Huawei problems
South Korean company Samsung Electronics released preliminary results for the third quarter, reporting a 58.1% increase in operating profit over the same period last year to $ 10.6 billion. Revenue increased by 6.5%, such progress was made possible by the increased demand for memory from Huawei Technologies.
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According to Samsung Securities experts, the Chinese giant managed to form a six-month supply of memory chips before the second phase of US sanctions came into force on September 15 this year. The demand from Huawei allowed Samsung not only to sell the surplus memory chips, but also to compensate for the weakness of the market in the server direction.
According to experts interviewed by Nikkei Asian Review, the political conflict between the United States and China will allow Samsung to strengthen its position both in the smartphone market and in the field of contract services for the production of semiconductor components. The past quarter also created favorable conditions for Samsung in the smartphone market. Apple has delayed its new iPhones and Huawei has suffered from US sanctions, so Samsung has some chances to consistently increase its smartphone sales by 49% to 80.6 million units.
According to TrendForce forecasts, in the fourth quarter the prices for memory chips will drop by 10%, the “Huawei factor” in this case will no longer be able to provide them with significant support. Samsung should benefit from increased demand for its displays in the current quarter as it supplies them to Apple’s new family of smartphones. In Q3, Samsung was able to cut marketing costs due to the pandemic, which had a beneficial effect on profit margins, experts say. Expansion of 5G networks and rise in popularity of foldable smartphones will help improve Samsung’s profit margins next year.