Samsung expecting profit decline on server chips in the current quarter

Samsung is expecting that profit will fall in the fourth quarter due to poor server chip demand, rising smartphone competition. The company recently posted its highest operating profit in the last two years. The company is positive to make a recovery in the chip and mobile market but it would not be an easy task due to the pandemic

Samsung’s executive vice president Ben Suh said that global demand is increasing every year there are many uncertainties such as additional waves of the Coronavirus.

Samsung is expecting that mobile chip demand will increase in the fourth quarter, due to restrictions on Huawei, orders from Chinese customers will boost but expecting weak server chip demand because of large customer inventories. Samsung is still waiting for its U.S. license approval to export chips to Huawei.

Samsung announced an operating profit of $11billion for the quarter ended September 30, 2020, which was the highest since 2014.

Samsung took the maximum Huawei share of smartphone market due to U.S restrictions which is the main reason for 50% more sales in smartphones. Samsung chip profit increased up to 82% due to higher sales of its low and mid-end smartphones.

Apple’s new iPhone model giving tough completion to Samsung smartphones and the company is expecting a drop of 5% in Samsung’s smartphone shipments as well as due to lack of new Samsung flagship models.

Park Sung-soon, an analyst at Cape Investment & Securities said that Huawei is losing its market shares in the smartphone market and Samsung marketing costs are expected higher in the current quarter,in the race with other tech companies, trying to capture the Huawei’s market share. He furthermore said that Apple new model demand will be high as it delayed the launch of its new model.

Samsung is hopeful to score double-digit sales in logic chip business next year Samsung other products such as home appliance and TV business performed well in the third quarter and posted record earnings.  The Samsung revenue was increased by 8% to 66.90 trillion won and net profit jumped to 9.36 trillion won with 49% increase. Samsung shares were dropped by 2% on Thursday.