Strong Smartphone Chip Sales Boost Samsung Profit Forecast

It helps to have fingers in a lot of pies, as Samsung pleases with chip growth despite smartphone gloom


A strong performance in the mobile chip market from Samsung has offset worries about its smartphone businesses, which is struggling amid intense competition from Apple, LG and a growing number of Chinese manufacturers also taking on more established brands.

Samsung is forecasting a better-than-expected third quarter profit nearly of 7.3 trillion won ( £4.13bn).

According to Reuters, analysts had been expecting 6.7 trillion won in profit, and the increase marks the first profit growth for Samsung in nearly two years.

Profit Growth

Samsung Galaxy S6 Edge+ (7)The South Korean electronics giant also expects a 7.5 percent increase in third quarter revenues, to 51 trillion won, but this is in line with expectations.Officially, its third quarter results will be published towards the end of this month.

Analysts are pointing to the favourable currency rate between the US dollar and South Korean Won as another reason for the improved forecast, alongside the strong component performance, all of which has helped offset the struggles of its mobile phone division.

In the summer, Samsung said it would be ‘adjusting’ (or discounting) the price of its flagship Samsung Galaxy S6 and Galaxy S6 Edge as it revealed it had not hit its sales goal for its most recent devices.

That announcement came as the company revealed that profits for its mobile device division fell to 2.76 trillion won (£1.50bn) from 4.42 trillion won (£2.41bn) a year earlier, and said it expects a slower second half of the year as Apple releases its newest devices.

Samsung did post an eight percent drop in net profits in its second quarter 2015 financial results in July, after net income fell to 5.75 trillion won (£3.2bn).

The company blamed the fall in its device sales on failing to respond to the demand for the Galaxy S6 and S6 Edge, both of which were revealed at Mobile World Congress back in March.

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