Samsung profits bounce back after 2-year slide, boosted by chips instead of phones

Posted:
in General Discussion edited October 2015
Samsung Electronics on Wednesday called for its operating profits to rise in the third quarter, putting an end to an almost two-year decline -- though the recovery is reportedly based mostly on chip sales.




The company said that its profits likely grew 79.8 percent year-over-year to approximately 7.3 trillion Korean won, or $6.3 billion, according to the Wall Street Journal. Revenue is estimated to have risen 7.5 percent to 51 trillion won ($44.26 billion). Final results are due at the end of October.

Analysts told the Journal that Samsung's chip division was likely responsible for about half of the company's profits, in turn helped by tight supply and solid prices. Another profit aid was display sales to Chinese smartphone makers.

Samsung's mobile division is believed to have done better than last year, thanks to a pared-down lineup and the launch of two high-end phones in August, the Galaxy Note 5 and the Galaxy S6 Edge+. The company deliberately moved up the release of the devices to preempt Apple's iPhone 6s and 6s Plus. It is however offering rebates up to $120 at some U.S. carriers, and making special effort to lure iPhone users, which may have led Q3 mobile profit margins to fall from 11 percent to between 8 and 9 percent.

Analysts say the mobile division likely raised operating profits from 1.75 trillion won ($1.75 billion) to 2 trillion won ($1.73 billion), but still sat in the shadow of the forecast 3.5 trillion won ($3.04 billion) from chips.

Samsung is in fact one of two manufacturers of the A9 chip in the 6s and 6s Plus, and might also be tasked with producing the A9X processor for the iPad Pro. In either case, while increased Apple sales will hurt Samsung's mobile unit, the damage should be alleviated by increased chip orders.
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Comments

  • Reply 1 of 65
    SpamSandwichSpamSandwich Posts: 33,408member
    Abandon your phone business, Samsung. You'll be better off in the long run.
  • Reply 2 of 65
    pmzpmz Posts: 3,433member
    I like the fact that Apple is mature enough to recognize that despite Samsung being a total shit and crooked thievery outfit...Apple still makes ALL the money, and has no qualms about buying their chips from them and letting them profit off iPhone in a small way.
  • Reply 3 of 65
    MacProMacPro Posts: 19,383member
    Even more reason for Apple to find alternatives to using Samsung for chip manufacturing.
  • Reply 4 of 65
    MacProMacPro Posts: 19,383member
    pmz wrote: »
    I like the fact that Apple is mature enough to recognize that despite Samsung being a total shit and crooked thievery outfit...Apple still makes ALL the money, and has no qualms about buying their chips from them and letting them profit off iPhone in a small way.

    And all the more damaging to Samsung if and when Apple stop using them That's called leverage.
  • Reply 5 of 65
    MacProMacPro Posts: 19,383member
    Abandon your phone business, Samsung. You'll be better off in the long run.

    Especially as Microsoft is taking the phone market by storm with their ... Oh wait a minute ... :D
  • Reply 6 of 65
    ceek74ceek74 Posts: 324member
    Hey Samsung, leave phones to the professionals.
  • Reply 7 of 65
    maestro64maestro64 Posts: 5,005member

    so when will Samsung begin offering a free finance of phones like Apple.

  • Reply 9 of 65
    pmz wrote: »
    I like the fact that Apple is mature enough to recognize that despite Samsung being a total shit and crooked thievery outfit...Apple still makes ALL the money, and has no qualms about buying their chips from them and letting them profit off iPhone in a small way.
    No one is forcing Apple to buy their chips from Samsung, if Apple could buy all the chips from other companies why not do that
  • Reply 10 of 65
    sirlance99sirlance99 Posts: 1,274member
    maestro64 wrote: »
    so when will Samsung begin offering a free finance of phones like Apple.

    Oh stop it. Apple was not even close to being the first to start a program like that. It was a natural evolution of all OEMs.
  • Reply 11 of 65
    fallenjtfallenjt Posts: 4,034member
    debengue wrote: »
    No one is forcing Apple to buy their chips from Samsung, if Apple could buy all the chips from other companies why not do that
    diversifying supplies. Otherwise, manufacturing go bad, you are screwed. Apple look at bigger picture here. GT Advance reminded you anything of Apple Watch issue?
  • Reply 12 of 65
    fallenjtfallenjt Posts: 4,034member
    Especially as Microsoft is taking the phone market by storm with their ... Oh wait a minute ... :D
    in fact, I like the pair of phones that MS released yesterday with Iris technology. Phone market is heating up again with three platforms. I bet that Windows phone will likely gain more market shares from Android in coming months.
  • Reply 13 of 65
    lkrupplkrupp Posts: 9,477member
    Quote:
    Originally Posted by digitalclips View Post





    Especially as Microsoft is taking the phone market by storm with their ... Oh wait a minute ... image



    While I agree with your snark it makes me wonder how things came to be this way. iOS and Android dominate the mobile operating system market. By all accounts these new Microsoft phones are really nice but it would appear they have little chance of challenging either iOS or Android. Why is that? Microsoft’s mobile OS isn’t all that bad is it? So is it simply momentum by the two top dogs? Has the consumer made their choice and the other mobile OSs will simply struggle along at the bottom? Has Microsoft burned its bridges with the mass market?

     

    Any ideas?

  • Reply 14 of 65
    fallenjtfallenjt Posts: 4,034member
    sog35 wrote: »
    Should not strong Samsung chip sales be a sign that iPhone sales is strong?

    Instead Wall Street is focusing on weak Fried Chicken sales in China (KFC).  Thus Apple is down another $6 billion while the broad market is green.

    I'm sick of this shit.  Apple needs to go private.
    you know why. It's because of shitty Anal ist like this one today:
    http://blogs.barrons.com/techtraderdaily/2015/10/07/apple-iphone-6s-sales-in-china-below-expectations-says-boutique-researcher-j-l-warren/?mod=yahoobarrons&ru=yahoo
    She just based on black market price of the iPhone in China to estimate the sale.
  • Reply 15 of 65
    One more good reason for Apple to continue shifting its chip suppliers. No need to keep Sasung profitable. Make them beg.
  • Reply 16 of 65
    darkpawdarkpaw Posts: 207member
    Quote:


    Analysts say the mobile division likely raised operating profits from 1.75 trillion won ($1.75 billion) to 2 trillion won ($1.73 billion), but still sat in the shadow of the forecast 3.5 trillion won ($3.04 billion) from chips.


     

    If 1.75 trillion won = $1.75 billion, how does 2 trillion won = $1.73 billion? And 3.5 trillion won = $3.04 billion?

  • Reply 17 of 65
    sog35 wrote: »
    Should not strong Samsung chip sales be a sign that iPhone sales is strong?

    Instead Wall Street is focusing on weak Fried Chicken sales in China (KFC).  Thus Apple is down another $6 billion while the broad market is green.

    I'm sick of this shit.  Apple needs to go private.
    it is never going to happen
  • Reply 18 of 65
    nolamacguynolamacguy Posts: 4,758member
    sirlance99 wrote: »
    Oh stop it. Apple was not even close to being the first to start a program like that. It was a natural evolution of all OEMs.

    im not familiar with other manufacturers. who else was doing it? i know the carriers were.
  • Reply 19 of 65
    sirlance99sirlance99 Posts: 1,274member
    nolamacguy wrote: »
    im not familiar with other manufacturers. who else was doing it? i know the carriers were.

    Motorola started doing it back in Nov 2013. Nothing wrong with anyone doing it and I'm glad Apple finally started doing it, it's just that for some reason people think that Apple was the first to do it.

    Doesn't matter for me as I just buy my iPhones outright.
  • Reply 20 of 65
    adybadyb Posts: 199member
    Quote:

    Originally Posted by lkrupp View Post

     



    ..... it makes me wonder how things came to be this way. iOS and Android dominate the mobile operating system market....

     

     ..... Has Microsoft burned its bridges with the mass market?

     

    Any ideas?


     

    2 things stand out for me, one is they stopped supporting a lot of phones when they made the upgrade (to 7.5??), some of which were nearly new. I wonder if that put some people off buying another one.

     

    The other one is app availability - my Bank has apps for both iOS & Android but not Windows Phone - there just isn't the demand. A chicken & egg situation?

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