Earlier this month, Samsung had posted its earnings estimates for Q3 2020. Now, the company has published its final numbers for the latest quarter. Despite the pandemic, the South Korean tech giant has come out like a winner, posting its highest-ever quarterly revenue.
Samsung said it saw a significant increase in consumer demand for smartphones, computers, TVs, and other devices. Even its display panel and semiconductor businesses did well during the period. The company reported that its sales climbed 8% from last year to KRW 66.96 trillion (around $59 billion). Its operating profit jumped 59% from Q3 2019 to KRW 12.35 trillion (around $10.09 billion), and its net profit rose to KRW 9.36 trillion (around $8.2 billion).
Smartphone sales jumped 51% compared to Q2 2020
The South Korean conglomerate's revenue was higher than market expectations. Due to the COVID-19 scenario, Samsung said that consumers purchased more smartphones and other consumer electronics. The company's highest-ever quarterly revenue is also due to its efficient cost management, lower marketing spends, one-time gains from its display and chip businesses, and the launch of flagship products like the Galaxy Note 20 and the Galaxy Z Fold 2.
The company's smartphone sales increased by 6.1% from the previous year to KRW 29.81 trillion (around $26.3 billion). Compared to Q2 2020, its smartphone business showed a whopping 51% jump as markets opened worldwide during Q3 2020. Samsung also attributed higher sales to the increased demand for mass-market products (Galaxy A and Galaxy M series smartphones) in markets like India. Products like the Galaxy Watch 3 and the Galaxy Buds Live also helped the company. Looking at the demand for value flagships, the company also launched the $699 Galaxy S20 FE to compete with the iPhone 12 and the OnePlus 8T.
Higher demand for memory chips and smartphone components
The firm also saw a huge increase in demand for memory and storage chips from data centers as most people have been learning and working from home, which increases the demand for online services. Despite the fall in memory chip prices, the company was able to improve its revenue. It also gained as the newly-launched Nvidia 3000 series GPUs are made using Samsung Foundry's 8nm process. Upcoming gaming consoles from Microsoft and Sony also use some of the company's semiconductor chips.
Higher sales of smartphones from other brands also meant that Samsung sold more memory chips, storage chips, camera sensors, and OLED screens. The company supplied millions of OLED screens for the iPhone 12 series and memory chips to Huawei before the US sanctions came into effect. In the coming quarters, the company expects to see a rise in sales of smartphone OLED panels and 5nm semiconductor chips. Samsung is planning to invest heavily in the semiconductor and foundry businesses to stay competitive.
Demand for premium QLED TVs and home appliances also saw a jump
In its press release, Samsung mentioned that its Consumer Electronics division also witnessed a sharp growth in sales of premium TVs and home appliances. The company also managed its supply chain more effectively to improve profits. In the near future, the company expects profitability to decline despite solid demand in the consumer electronics segment due to increased competition and rising costs.
The South Korean firm is also planning to launch new Quantum-Dot display panels in 2021, which means we can see new TVs from the company and other firms that buy displays from Samsung Display. It is also planning to launch more QLED and micro-LED TVs for homes sometime next year. For the premium market, Samsung launched high-end home appliances such as the Bespoke lineup of refrigerators and Grande AI washing machines and dryers.
Cautious outlook for Q4 2020
Samsung's profits could decline in the ongoing quarter due to the launch of the iPhone 12 series. The company also expects to receive fewer memory chip orders during the fourth quarter. While the company has warned about a possible decline in profits for Q4 2020, it expects 2021 to be better for the electronics industry. It also said that uncertainties could remain as there could be a possibility of recurring epidemic waves of COVID-19.
The company is planning to expand its mobile SoC (Exynos) business by expanding its 5nm lineup. It plans to sell 5G 5nm Exynos chips to other firms in 2021 as the smartphone market recovers even further. Speaking of 5G, the company managed to bag 5G network equipment contracts from various carriers in Japan and North American markets. Samsung is also planning to launch more high-resolution camera sensors for smartphones.
