Samsung Reports Q3
"Our strategy of producing high performance, differentiated products into multiple end markets allowed us to power ahead and deliver solid third quarter results amid a challenging market environment of the information-technology sector," said Dr. Woosik Chu, senior vice president and head of Samsung Electronics' investor-relations team.
"We anticipate our key business units to experience significant tailwinds in the fourth quarter, a seasonally strong period. Furthermore, our plan to invest an additional 1 trillion won to increase capacity of our memory-chip business is expected to create revenue opportunities next year."
Operating profit of the Semiconductor Business reached 1.27 trillion won on revenue of 4.91 trillion won in the third quarter. Operating profit increased 29.5% in the third quarter from the second quarter, mainly due to strong demand of memory chips from the PC sector.
In the memory-chip business, Samsung Electronics capitalized on the global shortage in supply of DRAM chips that subsequently led to a surge in DRAM prices. A timely redeployment of production from slower-growth products and strengthening higher-growth, premium products such as DDR2, enhanced profit margins by 3.7 percentage points from the previous quarter.
The memory business is expected to see further growth and higher returns in the fourth quarter, a seasonally strong period. The price of DRAM chips is expected to remain strong in the fourth quarter, and the demand of NAND flash memory chips is expected to grow with the introduction of new products that require larger memory such as MP3s, PMPs, and handsets.
In addition, migration to the advanced process technology, in particular 60-nanometer (nm) 8-Gigabit (Gb) NAND Flash technology, is expected to reduce manufacturing costs and improve profitability. Samsung Electronics' plan to invest an additional 1 trillion won to increase production capacity of memory chips is expected to create revenue opportunities next year.
The Telecommunication Network Business posted revenue of 4.71 trillion won, and operating income of 520 billion won. In the third quarter, robust sales of the "Ultra Edition" premium handsets in Europe helped boost sales to a record 30.7 million units and double-digit profit margins of 11.1%.
In the fourth-quarter, the pace of the demand increase is expected to accelerate as the overall 3G market grows and demand for replacement rises. The company expects both the volume of sales and average sales price (ASP) to see significant improvement with the launching of 3G "Ultra Edition" handsets in various form factors and multimedia handsets.