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SEOUL – Samsung Electronics Co. expects Q3 operating profit to be the highest of all time, exceeding analysts' estimates as demand for its electronic components remains high.
The world's largest smartphone and semiconductor manufacturer announced Friday an operating profit of 17.5 billion won (15.4 billion won) for the quarter, up 20 percent from 14.53 billion won. recorded a year ago. Samsung expects the turnover to grow from 62 trillion won to 65 trillion won.
Analysts surveyed by S & P Global Market Intelligence were banking on operating profit of 17 trillion won and a turnover of 65 trillion won for the quarter ended September 30th. Samsung announces its final results later this month.
The company's previous operating profit was 15.64 billion won, established in the first three months of the year.
Investors fear, however, that Samsung has no memory for how long and if the recent decline in smartphone sales of the company will cancel. Samsung Electronics shares are down 22% since last November, as demand in memory and handset growth became more certain.
Analysts expect lower shipments than expected for Samsung's flagship devices, the Galaxy S9 and Galaxy Note 9, which will be available on tablets in August. In the second quarter, mobile operating profit from Samsung plunged by one-third from the previous year. The leaders said that they were too cautious in adopting aggressive new features.
Samsung is fighting rivals on two fronts. It is still competing with the Apple Inc. iPhone for the world's richest consumers against high-end devices for a price of $ 1,000 or more. But it has also engaged in a battle for cheap phones against Chinese competitors that offer similar features at lower prices, thus challenging South Korea's dominance of markets like India.
Samsung smartphone shipments fell to 71.5 million units for the quarter ended June, down 10 percent from the previous year, according to Strategy Analytics, an expert in market research. Maintaining high volumes is essential for Samsung, as it gives the company the power to negotiate to keep low component prices from its suppliers. This is all the more critical now that the growth of smartphones is gradually decreasing as consumers keep their phones longer.
The company based in Suwon, South Korea, relies on memory chips to compensate for the losses suffered by mobiles. But memory prices "are recording worse than expected," said Susquehanna analyst Mehdi Hosseini last month, in which he lowered Samsung Electronics' price target.
Prices for NAND flash memory, used to store content on devices, are expected to fall by 10-15% over the last six months of 2018 compared to previous quarters, said Hosseini. The prices of DRAM, a chip that offers multi-tasking speed to devices, are expected to fall by 3% to 5% in the last three months of 2018, compared to the previous quarter, while the first half of 2019 could experience a double-digit fall. added. Samsung is the largest manufacturer of NAND and DRAM.
The prices of the memory would always be at historically high levels. But Hosseini does not expect a stabilization of Samsung's memory activity until mid-2019.
Write to Timothy W. Martin at [email protected]
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