Samsung Expects Strong Q3 Profit Growth On Rising Chip, Phone Demand

Samsung Electronics Co Ltd SSNLF sees third-quarter FY21 operating profit growth of 28% year-on-year to 15.8 trillion won ($13.2 billion), in line with the 15.75 trillion won analyst consensus. It sees consolidated sales of 73 trillion won, compared with the consensus of 73.5 trillion won.

The results reflect the memory chip and smartphone maker's benefit from strong demand as the global economy recovers from the pandemic Bloomberg reports. The prolonged crisis triggered the prices of memory chips, serving from mobile phones to smart cars and the data centers powering cloud computing and services.

Samsung is also expanding its foundry business. It is ramping up production in the mobile business to meet strong demand for its foldable phones. Semiconductors typically account for the most significant slice of its income.

Due to the slowing PC demand, rival Micron Technology Inc MU expects memory chip prices to fall in the current quarter due to stockpiling by customers.

However, Bloomberg analysts believe that DRAM operating profit could climb due to sequential bit growth of 3% - 5% and price rises in 3Q. NAND may also drive strong profit growth in 3Q due to a 10% - 15% sequential rise in bit shipments with a price increase of 5% - 9%. The chip shortage may help operating profit for the foundry business climb in 3Q.

Samsung's foundry business has benefited from the tech transition to 5G wireless technology and high-performance computing.

New foldable smartphones may fuel sales growth in the mobile division. Samsung sold one million new foldable phones at home in Korea. The robust sales of the Z foldable phones are likely to continue into Q1, HMC Securities SVP Greg Roh said. Chinese smartphone brands are increasing their purchases of foldable displays from Samsung, Roh added.

Price Action: MU shares traded lower by 0.11% at $70.46 in the premarket session on the last check Friday.

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