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Samsung’s Q320 Reports Recovery in TVs, Smartphones and OLED Displays
Samsung Electronics reported sales of 66.96t won, ($59.94b US) up 26.4% sequentially and up 8% Y/Y. Operating Profit was 12.35t won, up 52t won sequentially and up 59% Y/Y Operating margins rose to 18.4%, up from 15.2% sequentially and up 12.6% Y/Y. The focus of this report is on Samsung’s CE, IT and display businesses.
The IT/mobile division saw the greatest sequential increase (46.9%), with the mobile segment of that division rising 50.6% q/q as the Galaxy Note 20 and the Z Fold 2 were released, along with stronger tablet and watch sales. The outlook for 4Q was less optimistic as flagship sales momentum will slow and higher marketing costs due to competitive flagship phone releases and holiday promotions will reduce profitability. Samsung signed their largest 5G deal ever with Verizon (VZ) which will be reflected in this division, but there will be relatively little revenue from the deal this year. Over the next year, Samsung expects to increase mobile sales by ‘differentiating flagship line-up’, meaning more foldables and a possible change in Note line, but they expect the 2021 mobile business could be affected by mobile inventory adjustments, due to “overlapping component demand from mobile customers that started at the end of 3Q”, meaning customers were pre-ordered under the idea that component shortages would continue into 2021 and Samsung is to protect against component shortages that could will cannibalize Q121 or H121 shipments.
The display business grew 8.9% sequentially, but was down 21% Y/Y as Samsung Display reduced large panel LCD capacity. The Gen 6 OLED fabs had increased utilization and shipments were up Y/Y. In Q420 flexible OLED panel display shipments will increase as customers (other than Apple and Samsung) release new holiday models and the number of foldable panels increase. Large panel production losses decreased due to LCD price increases, but Samsung expects to end most of its large panel LCD production in 4Q, unlike LGD, which extended LCD production thru 2021.
Samsung’s TV set business saw a 55.2% improvement in sales on a sequentially as demand increased after a dismal 1H. While details were not given, strength in North American sales represented much of the positive momentum. Q420 guidance was for continued demand strength into the holiday season and an even greater focus on the premium TV market where Samsung is the leader. Comments concerning Q420 and 2021 while positive, were couched in caution about COVID-19.
Samsung Electronics reported sales of 66.96t won, ($59.94b US) up 26.4% sequentially and up 8% Y/Y. Operating Profit was 12.35t won, up 52t won sequentially and up 59% Y/Y Operating margins rose to 18.4%, up from 15.2% sequentially and up 12.6% Y/Y. The focus of this report is on Samsung’s CE, IT and display businesses.
The IT/mobile division saw the greatest sequential increase (46.9%), with the mobile segment of that division rising 50.6% q/q as the Galaxy Note 20 and the Z Fold 2 were released, along with stronger tablet and watch sales. The outlook for 4Q was less optimistic as flagship sales momentum will slow and higher marketing costs due to competitive flagship phone releases and holiday promotions will reduce profitability. Samsung signed their largest 5G deal ever with Verizon (VZ) which will be reflected in this division, but there will be relatively little revenue from the deal this year. Over the next year, Samsung expects to increase mobile sales by ‘differentiating flagship line-up’, meaning more foldables and a possible change in Note line, but they expect the 2021 mobile business could be affected by mobile inventory adjustments, due to “overlapping component demand from mobile customers that started at the end of 3Q”, meaning customers were pre-ordered under the idea that component shortages would continue into 2021 and Samsung is to protect against component shortages that could will cannibalize Q121 or H121 shipments.
The display business grew 8.9% sequentially, but was down 21% Y/Y as Samsung Display reduced large panel LCD capacity. The Gen 6 OLED fabs had increased utilization and shipments were up Y/Y. In Q420 flexible OLED panel display shipments will increase as customers (other than Apple and Samsung) release new holiday models and the number of foldable panels increase. Large panel production losses decreased due to LCD price increases, but Samsung expects to end most of its large panel LCD production in 4Q, unlike LGD, which extended LCD production thru 2021.
Samsung’s TV set business saw a 55.2% improvement in sales on a sequentially as demand increased after a dismal 1H. While details were not given, strength in North American sales represented much of the positive momentum. Q420 guidance was for continued demand strength into the holiday season and an even greater focus on the premium TV market where Samsung is the leader. Comments concerning Q420 and 2021 while positive, were couched in caution about COVID-19.
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