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Samsung’s profit jumps 58% in third quarter as Huawei ramps up chip orders

Written by Nikkei Asia Published on 

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South Korean tech giant seen benefiting from ongoing US-China conflict.

Samsung Electronics said Thursday that its operating profit jumped 58.1% to KRW 12.3 trillion (USD 10.6 billion) in the third quarter year-on-year, hitting its highest level in two years.

The world’s largest smartphone maker said that its sales increased 6.5% to KRW 66 trillion during the same period in its earnings guidance. Other earnings data will be disclosed later this month.

Analysts attributed the strong showing to increased memory chip orders from Huawei Technologies before the latest US sanctions on the company went into effect on September 15. The US Department of Commerce now requires global chipmakers to obtain a license to sell products made with US technology to the Chinese company.

“We believe there was a rush of orders from Huawei due to US sanctions,” said CW Chung, a senior analyst at Nomura. “The additional order from Huawei seems to be bigger than what we had previously estimated.”

The announcement comes as Apple looks set to unveil the iPhone 12 next week. The California-based company is expected to release its first 5G smartphone, following in the footsteps of Samsung and Huawei, which released their own models last year.

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Samsung and Huawei led the global smartphone market with 20% of market share each in the second quarter, followed by Apple with 11%, according to Counterpoint Research.

Experts say that the US-China conflict may help Samsung maintain its tech leadership against Chinese rivals, including Huawei and Semiconductor Manufacturing International Corp., China’s biggest chipmaker. SMIC said on Sunday that the US Commerce Department issued letters to its American suppliers alerting them that “accessories and raw materials to SMIC will be subject to further restrictions.”

“For Samsung, it is very good that the US is cracking down on Chinese tech companies that have chased it quickly,” said the head of a local research center, asking not to be named. “I am sure Samsung is very happy with it.”

Samsung shares were trading up 0.17% on Thursday morning.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

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