Samsung Q3 net jumps on chip, currency effects

South Korean top tech giant Samsung Electronics Co. said Thursday its net profit soared nearly 30 percent on-year in the third quarter, backed by strong chip sales and favorable foreign exchange rates.

Net income came to 5.45 trillion won ($4.82 billion) in the July-September period, up 29.3 percent from 4.22 trillion won from a year earlier and the first on-year rise in six quarters, Samsung said in its regulatory filing.

Sales gained 8.9 percent on-year to 51.6 trillion won in the third quarter, and its operating profit spiked 82.1 percent to 7.39 trillion won. The finalized results were almost in line with the earnings guidance released earlier this month.

Samsung's strong third-quarter earnings were attributed mainly to its brisk chip business, which emerged as a new cash cow for the company amid its weakening smartphone business.

Samsung's semiconductor division posted a record operating profit of 3.66 trillion won in the third quarter, shattering the previous record of 3.4 trillion won in the third quarter of 2010.

Its sales also hit an all-time high of 12.8 trillion won.

Samsung said the surge was fueled by rising sales of chips for high-end smartphones, as well as the growth in the data market that called for an expansion of cloud computing services.

The third-quarter bottom line was also bolstered by the weakness of the local currency against the U.S. dollar, which gave Samsung a foreign exchange gain of 800 billion won.

The local currency traded at 1,098 won per dollar in the second quarter, but it plunged to 1,170 won in the July-September period.

In contrast, Samsung's mobile business fared poorly as widely expected. Samsung's IT and mobile business posted an operating profit of 2.4 trillion won, slightly lower than the previous quarter's 2.7 trillion won.

Samsung said its handset shipments climbed 18 percent on-quarter to 105 million units in the third quarter, with smartphones accounting for around 80 percent, or 84 million units.

Industry tracker TrendForce estimates Samsung's third-quarter share in the global smartphone market at 24.6 percent, down 2.1 percentage points from the April-June period. That of U.S. archrival Apple Inc. came to 13.7 percent, down from the 15.4 percent posted earlier.

In contrast, top Chinese brands -- Huawel, Xiaomi and Lenovo -- held a combined market share of 19.8 percent, up 1.2 percentage points over the cited period.

Samsung released the Galaxy Note 5 and the Galaxy S6 Edge+ earlier-than-expected in August to avoid direct competition with Apple's iPhone 6S and the iPhone 6S Plus, but such efforts had a limited impact on its mobile returns, industry watchers said.

Samsung's consumer electronics business posted an operating profit of 360 billion won, jumping from 50 billion won a year earlier, on the back of the rising sales of Ultra HD TVs.

Its operating profit from the displays segment came to 930 billion won, soaring from 60 billion won posted in the third quarter of 2014.

Samsung's third-quarter facility investment came to 6 trillion won, with 3.7 trillion won going to the chip segment and 1.4 trillion won for the display business.

By the end of 2015, Samsung plans to make the combined annual investment of 27 trillion won, up 14 percent on-year.

Samsung also said it will buy back 11 trillion won worth of shares and retire them.

Looking ahead, Samsung painted a rosy picture of its chip business for the current quarter, but said its mobile business is expected to face tougher competition from rivals.

The market for smartphones will remain challenging throughout 2016, but Samsung plans to beef up its high-end smartphones to maintain profitability, the company said, adding it will seek to promote its mobile payment tool, Samsung Pay.

Shares of Samsung Electronics traded 2.6 percent higher at

1,342,000 won on the main bourse Thursday as of 11:03 a.m. The report was released before the local stock market opened. (Yonhap)