Samsung posts highest-ever quarterly revenue as demand roars back

Samsung posts highest-ever quarterly revenue as demand roars back


Samsung has received a boost from its components business, which extends from phones to data centers.

Angela Lang / CNET

The slump in cell phone demand caused by the pandemic appears to be over for Samsung, at least. The company posted its highest quarterly sales ever on Wednesday, thanks to “significantly increased consumer demand” for smartphones, computers and other products.

The company reported that third quarter operating income rose 59% year over year to 12.35 trillion won ($ 10.9 billion), while net income rose from 6.29 trillion won to 9.36 trillion won (Jan. , $ 2 billion). Revenue rose 8% to 66.96 trillion won (59 billion US dollars), better than the analysts polled by Thomson Reuters expected 64.7 trillion won (57 billion US dollars).

Samsung said it had “seen increased demand for smartphones and consumer electronics, as well as efficient cost management.” It also benefited from stronger sales of memory chips and other consumer products. “Even if the COVID-19 pandemic continues worldwide, the reopening of major economies has resulted in a significant increase in consumer demand,” Samsung said in a press release.

Still, Samsung warned that its boom could be short-lived. The company expects earnings to decline in the last three months of the year as server customers buy fewer memory chips and competition in smartphones and other consumer electronics intensifies. Apple in particular will be a tough rival for Samsung this quarter. The company presented four new iPhones, all of which are equipped with 5G connectivity.

Samsung expects 2021 to be better for the electronics industry. The company forecast “a recovery in global aggregate demand” but noted that “uncertainties remain about the possibility of recurring epidemic waves of COVID-19.”

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While Samsung is known as the giant in phones and televisions, it also has large companies that make components like memory chips. The company relied on its components business to grow its sales while the other electronics struggled. Since the novel coronavirus pandemic began, Samsung’s chip business has received a boost from data centers that rely on technology to store everything we do online. However, the smartphone industry was already booming in the third quarter, both in terms of cell phone sales and the memory chips used in these devices.

“Aggregate market demand rose in the third quarter as stimulus measures helped many economies recover from the lockdowns in the second quarter,” Samsung said. “The company’s smartphone sales increased quarter over quarter with the introduction of new flagship models like the Galaxy Note 20 and Galaxy Z Fold 2as well as increased sales of mass market models in key regions including India. “

A phone rebound

2020 should be a strong year for the phone industry as innovations like 5G and foldable screens got people back to shopping. Instead, financial problems and concerns about COVID-19 will limit the number of devices businesses can make and the number of phones actually purchased.

Samsung was one of the first companies to bring out a phone with 5G, however it was surpassed by Huawei. The Chinese mobile phone maker became the world’s largest smartphone vendor in the second quarter, the first time in nine years that Samsung or Apple no longer owned that title. And analysts expect Apple to be the second largest 5G phone provider in the world this year – with sales of less than three months. This puts Samsung, once a leader in the new connectivity, in third place.

Still, Huawei is fighting with the US government have benefited Samsung. The company has seen more sales of its smartphones and network devices as customers worry about Huawei’s longevity in the electronics market.

Samsung too has changed its plans to address changing consumer preferences during the pandemic. It was introduced in September the Galaxy S20 FE, a cheaper model for its flagship smartphone. The phone starts at $ 700 – $ 300 less than the regular S20 cost – and is in demand for cheaper devices due to the pandemic.

These plans seem to be working. According to Samsung, revenue in the wireless business increased 6.1% year over year to 29.81 trillion won ($ 26.3 billion). The level has increased by a whopping 51% the second quarter when the pandemic weighed on demand. Samsung attributed the increase to demand for its new flagship products.

It was also found that marketing costs were reduced. Mobile sales increased with new tablets and wearables from Samsung, including the Galaxy Tab S7. Galaxy Watch 3 and Galaxy Buds Live.

Samsung’s consumer electronics division saw strong sales growth in premium televisions and devices.

At the same time, Samsung’s components business continues to be in high demand. While memory chip prices fell, strong demand for phones and personal computers resulted in unexpectedly high shipments. The company also benefited from sales of other components for smartphones, and its customer business manufacturing processor received a boost from chip designers who made parts for data centers.

Earlier this month, Samsung announced that third-quarter earnings were up 58% to 12.3 trillion won. Sales grew nearly 5% to 66 trillion won. Both amounts were above Wall Street’s consensus estimates at the time.

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