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Samsung earnings rise due to Huawei and US problems

Huawei demand drives Samsung earnings

Samsung Electronics’ third-quarter earnings are expected to have climbed almost 60 percent to a two-year high. This is partly due to the demand for semiconductors by the Chinese Huawei group, which is now buying more in view of the US sanctions, the South Korean technology giant announced on Thursday.

On the other hand, the smartphone business has stabilized – partly because of the US sanctions, which have dampened sales of Huawei cell phones abroad and increased sales of Samsung devices in the medium and low price segments. For the past quarter, Samsung expects operating profit to increase by a total of 58 percent to around 12.3 trillion won (equivalent to 9.05 billion euros).

More than analysts expected

This is more than analysts expect. According to these figures, sales are likely to have increased by six percent. The group, which has a wide range of products including televisions, household appliances and monitors, will not publish details until later in the month. The chip business generates around three quarters of Samsung’s operating profit.

“It appears that Huawei is having a stronger impact on Samsung’s chip business than the market expected, and the smartphone and home appliance segments are also doing better,” said Nomura’s head of analysis division, CW Chung. In the recent corona crisis, the demand for air purifiers for the home was particularly strong. The USA tightened its sanctions against Huawei in mid-September to restrict access to semiconductors. The US government accuses the world’s largest network equipment supplier and second largest smartphone provider behind Samsung of being a vehicle for espionage by the Chinese state.

It is unclear whether Samsung earnings will continue to ride the wave of success in the fourth quarter. Analysts assume that memory chip prices are bottoming out and US competitor Apple will probably launch new iPhone models in October.