SEOUL – South Korean tech giant Samsung Electronics has defied global supply-chain challenges to forecast a near 30% jump in third-quarter operating profits today.
The world’s biggest smartphone maker in a regulatory filing said it expects its operating profits to reach around 15.8 trillion won (RM55.6 billion), up 27.9% on-year.
The company is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled empires known as “chaebols” that dominate business in South Korea, the world’s 12th-biggest economy.
The conglomerate’s overall turnover is equivalent to a fifth of the country’s gross domestic product.
Samsung Electronics estimated sales for the July-September period at 73 trillion won, up 9.0% on-year – a record for any quarter, a spokesman told AFP.
Covid-19 has wreaked havoc on the global economy, with lockdowns and travel bans imposed worldwide for many months.
But the pandemic – which has killed around 4.8 million people around the world – has also seen many tech companies boom.
Coronavirus-driven work-from-home arrangements have boosted demand for devices powered by Samsung’s chips, as well as home appliances like televisions and washing machines.
Now, supply-chain problems are hitting economic activity across the world, with companies facing shortages of key commodities, components and shipping capacity.
However, weakness in the South Korean won against the United States dollar has boosted the chip maker’s profit margins, said analysts, particularly in its smartphone business.
The currency effect has offset troubles caused by “disruptions in smartphone shipments” resulting from parts shortages and coronavirus lockdowns in Vietnam and India, where the firm has production lines, said Hana Financial Group in a report.
But looking forward, the prices of DRAM memory chips used in computers – a key Samsung product – are expected to drop in Q4, dampening prospects for the company.
“With a decline in consumer demand for computers post-Covid-19, chip prices are expected to fall starting in Q4,” said Park Sung-soon, an analyst at Cape Investment & Securities.
Parole release
Samsung’s latest earnings estimate comes after Lee Jae-yong, its vice-chairman and the de facto leader of the wider Samsung Group, walked out of prison in August.
Lee was released on parole after completing just over half of his 2½-year sentence in the latest example of South Korea using economic grounds to free business leaders imprisoned for corruption or tax evasion.
He was jailed for bribery, embezzlement and other offences in connection with the corruption scandal that brought down former president Park Geun-hye.
His return to management has eased concerns about decision-making at Samsung.
But, his August release is not the end of his legal travails: Lee remains on trial on separate accusations of manipulating a takeover to smooth his succession at the top of the Samsung Group – the same controversy over which he is said to have sought help from Geun-hye. – AFP, October 8, 2021
