Devices and Chips Power Samsung's 3Q Earnings

Samsung reported KRW 66.96 trillion ($60 billion) in consolidated revenue and KRW 12.35 trillion in operating profit for the third quarter of 2020. Even as the COVID-19 pandemic continues around the world, reopening of key economies led to significant increase in consumer demand.

Samsung was able to respond aggressively through flexible global supply chain management, reporting its highest-ever quarterly revenue. Quarterly operating profit rose 52 percent from the previous quarter, thanks to a boost in demand for smartphones and consumer electronics as well as efficient cost management. Third-quarter operating profit was also 59 percent higher year-on-year on stronger sales of memory chips and consumer products.

The memory business posted solid earnings as healthy demand for mobile and PC products led to higher-than-expected shipments, outweighing the impact of lower memory chip prices. The system LSI business also saw profit rising over demand for mobile phone components, while the Foundry Business benefitted from increased orders for HPC chips and other applications. The display business reported higher profit quarter-on-quarter led by growing mobile display sales on customers’ new product launches and improved supply-demand environment for large panels.

A near 50 percent jump in sales of smartphones including new flagship products, coupled with improved cost management, lifted earnings at the mobile business from the previous quarter. The consumer electronics division also witnessed a sharp growth in sales of premium TVs and appliances, supported by flexible management of supply chain and sales channels.

Looking ahead, Samsung expects profit to decline in the fourth quarter amid weakening memory chip demand from server customers and intensifying competition in mobile phones and consumer electronics. The mobile business is likely to see smartphone sales decline and marketing costs increase. In consumer electronics, profitability is expected to weaken. For 2021, the company expects a recovery in overall global demand but uncertainties will remain over the possibility of recurring epidemic waves of COVID-19.