Samsung Elec upbeat on chip outlook as Q3 profit falls 56%

Credit: REUTERS/KIM HONG-JI

Samsung Electronics Co Ltd said chip sales should pick up in 2020 as it reported a 56% fall in third-quarter operating profit on Thursday, reeling from memory price declines amid a prolonged industry downturn.

SEOUL, Oct 31 (Reuters) - Samsung Electronics Co Ltd 005930.KS said chip sales should pick up in 2020 as it reported a 56% fall in third-quarter operating profit on Thursday, reeling from memory price declines amid a prolonged industry downturn.

Samsung said there were positive signs for the chip outlook thanks to anticipated demand from data-centre customers and the continuing expansion of 5G smartphones.

But the South Korean tech giant warned that prospects for 2020 should be viewed with caution as uncertainties remained in the macroeconomic environment, a likely reference to the future of U.S.-China trade relations.

The world's top maker of memory chips and smartphones said operating profit was 7.8 trillion won ($6.7 billion), slightly above the 7.7 trillion won estimate the company released earlier. Revenue fell 5.3% to 62 trillion won, in line with its earlier estimates.

Samsung's profit has slumped on-year for four consecutive quarters and it is expected to fall again in the current quarter, analysts say.

Earlier this month its cross-town chip rival SK Hynix 000660.KS said 5G-enabled smartphones should help lift the global memory market out of the doldrums next year.

Analysts say strong smartphone sales cushioned the profit fall, with U.S. sanctions on Huawei Technologies HWT.UL effectively barring U.S. firms from supplying the Chinese competitor.

Samsung said its mobile business posted a 32% rise in operating profit to 2.9 trillion won in the third quarter.

(Reporting by Ju-min Park and Heekyong Yang; Editing by Stephen Coates)

((ju-min.park@thomsonreuters.com; +82 2 3704 5650; Reuters Messaging: ju-min.park.thomsonreuters.com@reuters.net))

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