Samsung reveals surge in operating profits, predicts slower smartphone rise
Samsung has just released its third-quarter earnings report and, quite unsurprisingly, the figures show a strong quarter with a rise in the manufacturer's operating profits. Analysts, however, are concerned about the company's ability to surpass that in light of the very fierce competition in the mobile device industry.
The Korean manufacturer's operating profits from July to September rose to 10.16 trillion won, roughly $9.56 billion, up by 7% from the second quarter's 9.53 trillion won or $8.97 billion. The biggest source of earnings, of course, came from the company's IT and mobile division, its smartphones, bringing in profits of 6.70 trillion won, around $6.3 billion. Interestingly, this rise in smartphone profits is attributed mostly to Samsung casting an extremely wide net with a large variety of cheaper Android-powered Galaxy devices instead of putting everything in the high-end smartphone basket.
But Samsung's biggest growth rate actually came from its chip manufacturing business, specifically from its DRAM and NAND mobile memory chips. That business clocked in profits of 2.06 trillion won, $2.45 billion, twice the amount from the same period last year and so far its highest in three years. Samsung predicts shipments of its chips will stay strong and demand will go even higher as manufacturers try to churn out more devices for the holiday season.
This may be Samsung's record profit so far, but analysts wonder if Samsung will be able to maintain its winning streak, likening it to Nokia who has peaked in its market share and has gone downhill since. Samsung is indeed facing a tough road ahead and the company knows it, projecting slower smartphone growth in the months ahead due to the coming season when competition between smartphone manufacturers dramatically increases.
Download: Samsung Earnings Report (PDF)