Samsung expects a high percentage jump in profits

Today, Samsung issued its earnings guidance for the third quarter of 2020, and there are expectations by the company that the total amount of revenues will reach 66 trillion Korean won (about 57 billion dollars), and 12.3 trillion won (about 10.6 billion dollars) in operating profits for the quarter. This represents an amazing 58% increase in operating profits compared to the same period last year. Contents of the topic Toggle Samsung's profit percentage during the years 2018, 2019 Samsung's current profit guidelines Samsung's steps to improve the performance of its divisions over the past year Samsung's application for a license to supply chips to Huawei Samsung's profit percentage during the years 2018, 2019 The company's operating profits in the third quarter of 2019 amounted to about $6.71 billion, a sharp decline of 56 percent from its record profits in the third quarter of the year. In 2018, $16 billion, Samsung's balance sheet has declined over the past year due to lower profits from its semiconductor division, and memory chip prices have continued to fall due to a supply glut, and demand has not increased. Therefore, Samsung focused on increasing its profits from other divisions, especially mobile devices. The mobile division saw its operating profits increase by 32 percent during the third quarter of 2019 compared to last year. Samsung also continued to diversify its product range throughout 2020 and also benefited from the opportunity presented by Huawei's problems with the US government.

Samsung's current earnings guidance As part of the earnings guidance it issued today, Samsung did not release any details on how each division will perform. This will come when the full earnings result is announced in the next few weeks. However, analysts believe that the excellent performance in the last quarter of the year can be attributed to strong sales of mobile phones, chipsets and memory, and according to some analysts the mobile division is already expected to achieve its largest profit in at least four years. Samsung's steps to improve the performance of its divisions during the past year Samsung took a number of steps during the past year to improve the performance of its mobile phone division, including the following: • It launched a group of mid-range and low-priced phones with more aggressive prices to capture the market share lost by Chinese competitors. • It also launched more premium models and created a new niche of expensive foldable smartphones.

• The company also benefited from Huawei's woes. The US government has sentenced the Chinese giant to death, and this is tantamount to access to the Android device and important hardware such as chipsets and memory. We also notice that customers are now hesitant to buy Huawei phones, because there is still no kind of clarity on whether it will be in a position to continue providing sales and services. Geopolitical tensions between India and China have also played into Samsung's favour, as anti-China sentiment has taken hold in the country, as a result of which many consumers are actively boycotting Chinese products.

Samsung has lost a lot of market share in India to Chinese manufacturers like Huawei, Oppo, Xiaomi, Vivo and more, and has also taken full advantage of this opportunity by going after customers in the affordable segment with higher priced phones specifically designed for the Indian market. Huawei's woes also helped Samsung's chipset division. After it became clear that the US government would also cut off Huawei's access to these components, Huawei rushed to stockpile chips from Samsung, fearing that it might eventually run out of chips and therefore not be able to obtain them for new smartphones. Huawei has also been taken out of the 5G equipment race in most countries, and Samsung has swooped in to win those customers as well, only recently signing a $6 billion-plus contract to supply network equipment to Huawei.

Samsung has applied for a license to supply chips to Huawei. Samsung has applied to be able to obtain a license from the US government to continue supplying chips to Huawei, but there is no indication that it will be granted. There is also the problem of demand for memory chips not recovering, which will in turn keep prices low in the fourth quarter, limiting the ability of Samsung's cash reel to bring in more money. Even with lower demand for its premium devices, Samsung will now be relying on the Galaxy S20 FE to do well. Given how aggressively it is priced in key markets, the Galaxy S20 FE has the potential to capture market share that it has previously lost to competitors like OnePlus, and it's best to do so because Samsung doesn't have any other flagships left to release in 2020.