Samsung posts record quarterly profit despite smartphone slump

Electronics giant benefits from continued strong demand for chips.

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Steven Musil
2 min read

Samsung is still snagging record profits, despite slowdown in smartphone sales.

Sarah Tew/CNET

Samsung just turned its biggest quarter ever -- no thanks to smartphones .

The South Korea electronics giant on Tuesday reported its biggest operating profit ever as it benefited from strong demand for its memory chips and other components. Samsung not only uses processors it manufactures in its own devices but also sells them to customers like Apple .

Samsung said its third-quarter operating profit is 17.57 trillion won ($15.4 billion), an increase of nearly 21 percent from the year-ago period. Samsung also generated revenue of 65.46 trillion won ($57.48 billion), up 5.5 percent from the previous year. 

"In the third quarter, operating profit reached a new quarterly high for the company driven mainly by the continued strength of the Memory Business," Samsung said in a statement.

Overall, the operating profit from Samsung's semiconductor business rose 37 percent to 13.65 trillion won ($11.98 billion), while revenue came in at 24.7 trillion won ($21.75 billion), up 24 percent.

Samsung is best known as the world's biggest phone and TV maker, but it also sells more memory chips than any other company on the planet. Last year, Samsung became the world's biggest semiconductor maker in terms of revenue, beating out the long-term leader Intel.

Samsung's mobile division didn't fare quite as well. In the third quarter, Samsung's mobile operating profit declined 32 percent from the previous year to 2.22 trillion won ($1.94 billion). Sequentially, revenue dropped 10 percent.

Samsung's flagship Galaxy S9 and S9 Plus hit the market on March 16 with better cameras and improved audio, but they didn't quite fly off the shelves. In the second quarter -- the first full period of Galaxy S9 sales -- Samsung actually lost more market share than any other major handset maker and posted its worst performance since the second quarter of 2013.

Samsung said sales of the Galaxy S9 and S9 Plus were "solid" in the quarter but that profits were stung by flat sales of its mid- to low-end handsets, as well as increased promotional costs and a negative currency impact.

For the fourth quarter, Samsung expects smartphone shipments to rise, but warned that earnings will likely be hurt by increased promotional costs.

Samsung retained its smartphone crown in the second quarter despite shipping 10 percent fewer phones than the same quarter in 2017, market researcher Strategy Analytics reported in July, citing the most recent data available.Overall, the global mobile market was down 3 percent in the quarter due to longer replacement rates, diminishing carrier subsidies, and a lack of new hardware design innovation.

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