Samsung Electronics posts record quarterly earnings in Q3 on solid chip demand

SEOUL - Samsung Electronics, South Korea's tech giant, posted its record-quarterly-high earnings in the third quarter thanks mainly to solid demand for memory chips, the company said Wednesday.

Samsung's operating profit reached a new high of 17.6 trillion won ($15.4 billion) in the July-September quarter, up 20.9 percent from a year earlier.

It surpassed the previous high of 15.6 trillion won tallied in the first quarter of this year.

Revenue gained 5.5 percent over the year to 65.5 trillion won in the quarter. It was slightly lower than the record high of 66 trillion won logged in the fourth quarter of last year.

The ratio of operating profit to revenue, which gauges profitability, was 26.8 percent in the September quarter.

The high profitability was attributed to brisk sales of memory chips. Samsung's chipmaking unit posted 13.7 trillion won of operating profit on revenue of 24.8 trillion won.

Both the operating profit and the revenue of the chipmaking division were the highest readings in Samsung's history. The division's ratio of operating profit to revenue surged to 55.1 percent in the quarter.

Despite the strong chip sales, concerns remained about the excessive dependence on the chipmaking business in making profit. The chip division's operating profit accounted for 77.7 percent of the total in the third quarter.

Global prices for memory chips turned downward recently, casting a shadow on Samsung's fourth-quarter earnings.

Samsung also forecast its fourth-quarter earnings would decline on a quarterly basis on the slowdown in the global chip industry.

Uncertainties lingered over trade conflict among major economies, which could weaken global trade and negatively affect the exporters of South Korea, including Samsung.

The display panel division posted an operating profit of 1.1 trillion won on revenue of 10.1 trillion won in the quarter.

The display division's operating profit jumped from 140 billion won of the previous quarter due to rising demand for flexible OLED panels and improved demand for LCD panels used in TV.

Samsung said it planned to spend 31.8 trillion won on facility investment in 2018, including 24.9 trillion won on semiconductors and 3.7 trillion won on display panels.

The IT and Mobile unit, which manufactures smartphones, logged an operating profit of 2.2 trillion won on revenue of 24.9 trillion in the third quarter.

It was down from 2.7 trillion won of operating profit in the previous quarter amid an increase in marketing costs for the newly launched Galaxy Note9 and the foreign-exchange loss. It was down 32.5 percent compared with the same quarter of last year.

Market watchers forecast that Samsung's smartphone business would face difficulty in the fourth quarter amid the stiffer competition and the expected rise in marketing costs for the year-end sales promotion.

The consumer electronics unit, which makes TVs, washers and fridges, logged an operating profit of 560 billion won on revenue of 10.2 trillion won. The profit was slightly up from the prior quarter.