Samsung expects hit to profit even after recent sales surge

Hannah Boland
·2-min read

Samsung has warned profits will slip in its current quarter amid rising smartphone competition, even as it reported record revenues for the three months to the end of September.

The South Korean tech giant said its operating profit jumped 59pc in the third quarter to 12.35 trillion Korean won (£8.4bn), with sales in its smartphone division having jumped 50pc and profits from the unit the highest they have been in a quarter since 2014.

The increase is thought to have come from more users shifting away from Huawei to Samsung phones after US restrictions were introduced on the Chinese firm earlier this year, blocking it from access to American-made chips. 

Analysts said Samsung would likely be spending heavily on marketing to "try to take over Huawei's market share".

Cape Investment and Securities analyst Park Sung-Soon said Apple, Vivo and Xiaomi would all be competing for the gains, "with Huawei's presence becoming fainter in the smartphone market". 

Samsung, the world's largest maker of memory chips and personal electronics, said it was expecting mobile chip demand to remain robust going into the fourth quarter, partly due to the US restrictions. 

Han Jin-man, the senior vice president of Samsung's memory chip business, said: "After the US restrictions against Huawei took effect in earnest, demand from Chinese customers has increased."

Samsung is awaiting to see if it will receive a US licence to export chips to Huawei. Separately on Thursday, the Financial Times reported that the US was allowing some sales of chips to the Chinese firm as long as they did not go into its 5G business.

Despite the strong quarter, Samsung warned its profits were likely to fall in the current three-month period, with demand from server customers set to weaken due to their large inventories.

Samsung also pointed to rising competition in mobile phones, which it said could weigh on its profits.

Shares in the company dipped around 2pc on the update.

Telegraph Tech 100 2020: see the full list
Telegraph Tech 100 2020: see the full list