Samsung Electronics released its forecast for the third quarter of 2020 earnings on Thursday. The company expects its third-quarter revenue to reach 66 trillion won (approximately US$57 billion), an increase of 6.45% from the same period last year, and exceeding the 63.25 trillion won (approximately US$54.67 billion) expected by analysts; Operating profit was 12.3 trillion won (approximately US$10.6 billion), an increase of 58.1% over the same period last year, and also exceeded market expectations of 10.5 trillion won (approximately US$9.07 billion).

Analysts said that the reason why Samsung’s operating profit increased so much in the third quarter may be due to the strong recovery of smartphone sales and the boosting effect brought by Huawei’s snapping up of memory chips. The profit of Samsung’s smartphone business accounted for one-third of last year’s total profit. As the demand for mobile phones rebounded after the new crown pneumonia epidemic suppressed sales in the first half of 2020, the profit of this business may increase substantially. According to data from Counterpoint Research, a market research organization, Samsung’s smartphone shipments in the third quarter may have increased by 48% over the second quarter, from 54.2 million to 80 million.

As the memory chip business is still sluggish, Samsung’s overall chip business performed weakly this quarter. But analysts said that orders for game console graphics chips and orders for mobile chips including Huawei have boosted shipments. Last year, the chip business accounted for about half of Samsung’s profits. Analysts said that Samsung’s US competitor Micron Technology’s profit exceeded market expectations last month, which may also benefit from Huawei’s eagerness to increase inventory.

HI Investment & Securities analyst Song Myung-sup said: “Huawei’s emergency orders in late August pushed up Samsung’s DRAM and NAND chip shipments, offsetting the impact of weak business and preventing the decline in semiconductor profits this quarter. “DRAMeXchange data shows that the prices of DRAM chips that allow devices to perform multitasking and NAND chips that store data have fallen in the third quarter.

The profit of Samsung’s display business may decline because its major customer Apple’s new iPhone was released later than expected. However, analysts said that as Samsung sells more electronic products online and cuts operating costs, the revenue of TV sets and home appliances may rise.

Samsung is the world’s leading supplier of memory chips and smartphones. The company has not broken down the performance of their respective business units and said it will announce detailed financial reports later this month. So far this year, Samsung’s share price has risen by about 7.3%, while the Korea Composite Stock Index (Kospi) has risen by 8.6%. (Little)