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Samsung Electronics to Post Q420 Sequential Decline in Profits
After a strong Q321, Samsung expects profit to decline in the fourth quarter, driven by weakening demand from server customers for memory chips. The company said it expects to post operating profit of about 9 trillion Korean won ($8.2 billion) for the October-December quarter, an increase compared to the same period a year earlier. Samsung added that it also expects smartphone sales to decline and marketing costs to increase because of the competitive market environment, partly due to the iPhone 12 success in the quarter. The earnings forecast comes shortly after the death of Lee Kun-hee — the business titan who led Samsung's rise from a modest South Korean company to a multinational conglomerate. Lee died on Sunday at the age of 78. Lee's son, Lee Jae-yong, has been the company's de facto leader since his father's heart attack in 2014. The younger Lee was found guilty of bribery and other corruption charges in 2017 and served less than a year behind bars before an appeals court threw out some of the charges and suspended his sentence. Last month, the vice chairman was indicted over a controversial 2015 merger that helped him tighten control over the company. Despite the legal troubles, Daiwa analysts said they "expect JY Lee and top management to actively look for [merger and acquisition] opportunities to secure the company's long-term earnings growth momentum" and enhance the company's value beyond the era of chairman Lee. Samsung rival SK Hynix announced this month that it's buying part of Intel's memory chip making business for $9 billion. And AMD on Tuesday agreed to buy rival chipmaker Xilinx in a $35 billion deal. That suggests demand for many of its products has kept up during the coronavirus pandemic even as it faces tough competition in the smartphone market.
After a strong Q321, Samsung expects profit to decline in the fourth quarter, driven by weakening demand from server customers for memory chips. The company said it expects to post operating profit of about 9 trillion Korean won ($8.2 billion) for the October-December quarter, an increase compared to the same period a year earlier. Samsung added that it also expects smartphone sales to decline and marketing costs to increase because of the competitive market environment, partly due to the iPhone 12 success in the quarter. The earnings forecast comes shortly after the death of Lee Kun-hee — the business titan who led Samsung's rise from a modest South Korean company to a multinational conglomerate. Lee died on Sunday at the age of 78. Lee's son, Lee Jae-yong, has been the company's de facto leader since his father's heart attack in 2014. The younger Lee was found guilty of bribery and other corruption charges in 2017 and served less than a year behind bars before an appeals court threw out some of the charges and suspended his sentence. Last month, the vice chairman was indicted over a controversial 2015 merger that helped him tighten control over the company. Despite the legal troubles, Daiwa analysts said they "expect JY Lee and top management to actively look for [merger and acquisition] opportunities to secure the company's long-term earnings growth momentum" and enhance the company's value beyond the era of chairman Lee. Samsung rival SK Hynix announced this month that it's buying part of Intel's memory chip making business for $9 billion. And AMD on Tuesday agreed to buy rival chipmaker Xilinx in a $35 billion deal. That suggests demand for many of its products has kept up during the coronavirus pandemic even as it faces tough competition in the smartphone market.
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