Samsung Estimates First Profit Growth in Two Years Thanks to Sales of Chips, Not Hardware

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Samsung-Galaxy-S6-Edge-PlusSamsung this morning announced its forecast predictions for the company's third quarter, suggesting an overall year-over-year profit growth of 79.8 percent, which would be its first since 2013.

The company didn't provide specifics regarding where the profit came from, but analysts speaking with The Wall Street Journal attributed it to the "robust sales" of various chips and displays used in smartphones and other devices throughout the year. Specifically, those analysts believed Samsung's earnings this year are being fueled by the chip sales "due to tight supply and firm pricing."

Overall, the company's chip unit will likely account for nearly half of its total profit in the third quarter of 2015, with the addition of display sales bolstering the rest of its foreseeable monetary gains.

The South Korean technology company said Wednesday its operating profit for the three months ended Sept. 30 likely rose 79.8% to about 7.3 trillion Korean won (US$6.3 billion), its first year-over-year growth since the third quarter of 2013 when the company posted a 26% increase. Revenue likely rose about 7.5% to 51 trillion won.

Analysts were expecting Samsung to post an operating profit of 6.5 trillion won on revenue of 50.5 trillion won, based on a poll of nine analysts.

Most recently, Samsung announced the newest iterations of its smartphone lineup, the Samsung Galaxy Note5 and the Samsung Galaxy S6 Edge+, whose 5.7-inch displays make them slightly larger than Apple's iPhone 6s Plus and are marketed as a direct competitor to the Cupertino company's large-screened device. Announced and launched in August -- alongside services like Samsung Pay and the new Gear S2 Smartwatch -- the new smartphones were pegged as an early competitor for Apple's iPhone 6s and iPhone 6s Plus.

But, if the analysts' predictions today are correct, Samsung saw most of its profits from its contribution to chip production within Apple's own smartphone line-up. When initially discovered a few days after the launch of the iPhone 6s and iPhone 6s Plus, the split of A9 chips between Samsung and TSMC met a small wave of controversy, with one iOS developer going so far as to calculate the percentage split between the two manufacturers. Even though the 60/40 percentage was in favor of TSMC, it appears Samsung's chip manufacturing for the 6s and 6s Plus was enough to help in some way boost its overall quarterly growth.

Tag: Samsung

Top Rated Comments

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66 months ago
Samsung made money because of iPhones.

That is a terrible thing to tell investors.
Score: 16 Votes (Like | Disagree)
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66 months ago
The iPhone is Samsung's biggest moneymaker. They're just that good at copying Apple.
Score: 10 Votes (Like | Disagree)
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66 months ago

Samsung made money because of iPhones.

That is a terrible thing to tell investors.

Not necessarily... remember, investors care about their money, not fanboy smartphone wars. Samsung is producing quality components for a popular device and making a good chunk of change in the process... all seems to be well for them. Sure, there's always the threat of Apple going 100% TSMC, but judging by their willingness to dual-source, I don't think that's a huge concern.
Score: 8 Votes (Like | Disagree)
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66 months ago
This is likely the norm for them going forward. Better at manufacturing chips than making mobile devices. Apple likely prefers them to be this way as well. I don't think their smartphone business will ever get back to where it was 2012-2013.
Score: 6 Votes (Like | Disagree)
Avatar
66 months ago

As opposed to, Apple made good iPhones because they had solid Samsung components upon which to build?
Man get over yourself.

Samsung may have built the chips, but the A-line has been designed by Apple. Saying it's strictly a Samsung component is like saying a canvas-maker should get credit for Monet "building" his painting on their solid component.
Score: 6 Votes (Like | Disagree)
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66 months ago

I cannot remember one post where we have agreed on something. It is interesting that we are so opposite on just about everything. So lets see if we can agree that the sky is blue. lol :p

Not at night. :D Seriously though, I've agreed with a fair number of your quotes; indicated by my thumbs up. I rarely comment on quotes I agree with. I think the thumbs up does the job.:) We were in total 100% agreement about the Apple Watch launch. I even drafted a beautifully empathetic post about your travails with receiving Apple Watches for you and the Mrs. I had all the feels for you waiting for those watches. We disagree on things because you're an Apple fan and I'm more device and company agnostic. It's totally okay though. Even in disagreement you've never been antagonistic or discourteous. I see it as healthy debate. If it's any consolation, I disagree with my wife too. It's just better to disagree with you because you can't make me sleep on the couch.
Score: 4 Votes (Like | Disagree)

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