Samsung Profit Likely To Hit New Record

Samsung Electronics Co. Ltd. has reported that its third-quarter operating profit likely hit a new record, beating analyst estimates. The company said that its operating profit nearly tripled from a year earlier, boosted by strong memory chip prices. Samsung will disclose detailed results at the end of October.

Third-quarter operating profit was likely 14.5 trillion won ($12.81 billion), higher than the 14.3 trillion won expected by analysts in a Thomson Reuters poll. Revenue likely rose 29.7 percent from a year earlier to 62 trillion won, slightly lower than the analysts’ average forecast of 62.1 trillion won. Samsung is also expected to announce a new shareholder return policy for the next three years when it releases third-quarter results.

Samsung already posted record earnings in the previous quarter. Samsung’s shares fell less than 1 percent in Seoul Friday after the preliminary results were released. The shares have climbed more than 50 percent this year.

Samsung, the world’s largest maker of memory chips, is expected to record 2017 earnings driven by an increase in demand for memory chips with greater storage capacity. The Suwon, South Korea-based company supplies DRAM and NAND chips for smartphone makers and data center operators.

Demand for the chips has exceeded expectations, rapidly lifting prices. Contract prices for 32 gigabyte DRAM server modules climbed 7.2 percent in the September quarter from the June period. It is also reported that 128 gigabit MLC NAND flash memory chips prices rose 4.7 percent in the same period.

Demand for NAND flash chips exceeded supply for six straight quarters, as of last month. Strong global demand for DRAM chips is expected to continue to outpace supply in 2018. New plants from Samsung and chip maker SK Hynix are not expected to operate until 2019

Brisk sales of the latest Galaxy Note 8 smartphone lifted mobile profit. Pre-orders for the Note 8 hit the highest-ever for the Note series. Samsung is counting on the smartphones released this year to recover from last year’s debacle with the Note 7.

Samsung also leads in the next generation of screens called organic light-emitting diode displays. The company is planning to release a phone with a bendable display next year.

The August conviction of de-facto chief Jay Y. Lee on charges he bribed a presidential confidante has also damaged Samsung’s reputation. The conviction was part of a bigger corruption scandal that brought down South Korea’s president. The 49-year-old businessman denies the charges and is appealing the conviction.

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