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Samsung forecasts record $15.5B profit thanks to chips not smartphones

Samsung’s last quarter of business saw its slowest growth of profits in a year thanks to weak sales of its flagship Galaxy S9 smartphone. But the company is about much more than just phones, and that’s why it is forecasting a record operating profit of nearly $15.5 billion for its upcoming Q3 results.

The Korean firm said in a filing that it expects revenue to jump five percent year-on-year, to hit 65 trillion KRW ($57.5 billion) with an operating profit of 17.5 trillion KRW ($15.5 billion), which represents a 20 percent annual jump and an 18 percent increase on the previous quarter.

Samsung’s pre-earnings filings are brief and don’t contain detailed information about the performance of its business units, thus we can’t assess demand for its high-end phones — which include the Note 9 — in the quarter that Apple unveiled its newest iPhones. But the clues suggest that it is actually the more boring (but reliable) divisions that are, once again, responsible for Samsung’s strong forecast.

Chips account for some 80 percent of Samsung’s revenue, and demand for DRAM, which is important in areas such as cloud, pushed prices up during Q3 but analysts suspect that the growth won’t last.

“Its earnings appeared to have peaked,” Mirae Asset Daewoo Securities analyst William Park told Reuters. “DRAM prices are going to fall, although not dramatically, and that will negatively impact its margins.”

We’ll know more when Samsung releases its full earnings this month.

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