Samsung Electronics achieved a remarkable operating profit margin of 55.08% in the third quarter of this year, outpacing even major U.S. tech companies and Japan's leading materials, components, and equipment firms. The operating profit margin for the semiconductor (DS) division is expected to reach between 75% and 80%, indicating parity with SK Hynix.
On October 8, Samsung Electronics announced its preliminary results for the third quarter, reporting revenue of 195 trillion won and an operating profit of 107.4 trillion won.
These figures represent a significant increase of 13.7% in revenue and 20.01% in operating profit compared to the previous quarter. Since the fourth quarter of last year, Samsung has consistently set new records for quarterly revenue and operating profit.
The operating profit exceeded market expectations. According to a recent survey by Yonhap Infomax, the consensus forecast from securities firms for the third quarter was 200.2577 trillion won in revenue and 105.4137 trillion won in operating profit. While revenue fell short of expectations, the operating profit surpassed projections by approximately 2 trillion won.
Notably, the operating profit for the third quarter alone has already exceeded double the annual operating profit of 43.6 trillion won recorded last year. Cumulative operating profit for the first three quarters of this year has reached 254 trillion won, raising the possibility that annual operating profit could surpass 300 trillion won and approach 400 trillion won.
The most noteworthy aspect is the operating profit margin. Initially, there were concerns that Samsung's third-quarter operating profit margin would fall below the second quarter's 52.18% due to performance-related bonuses. However, strong demand and rising prices for memory products driven by advancements in the artificial intelligence (AI) industry led to an operating profit margin exceeding 55% in the third quarter.
This achievement surpasses the operating profit margins of U.S. big tech companies like Google and Meta, which focus on AI and services, as well as Japan's precision equipment firms like Keyence, whose margins range from 30% to 50%.
The semiconductor (DS) division is credited with driving these results. Increased demand for high-bandwidth memory (HBM) for AI servers and a continued rise in prices for general memory products have significantly improved profitability.
According to market research firm DRAMeXchange, the average price of PC DRAM in September was $26, up $1 from the previous month, setting a new record. The average price of NAND for memory cards and USBs rose to $30.6, increasing by $0.1 from the previous month, marking the 21st consecutive month of price increases.
HBM is also expected to contribute significantly to performance improvements. HBM prices, which have not reflected the recent price surges due to long-term contracts, are anticipated to rise sharply starting next year.
Analysts predict that the DS division's operating profit margin for the third quarter will be around 75%, comparable to SK Hynix, with some forecasts suggesting that the memory division's margin could exceed 80%. Despite the poor performance of the home appliance and mobile (DX) division, which recorded its first loss in history in the second quarter, the high profitability of the memory business has bolstered overall company performance.
Samsung did not disclose performance by business segment on this occasion. Final results, including revenue and operating profit by segment, are expected to be announced at the end of this month. However, analysts suggest that the DX division may continue to face challenges in rebounding this quarter due to 'chipflation' and rising raw material prices.
This preliminary result is based on estimates made in accordance with the Korean International Financial Reporting Standards (K-IFRS) and is provided for investor convenience before the conclusion of the financial statements. Samsung plans to accept pre-submitted questions from shareholders regarding management conditions and address key issues during the earnings conference call.
* This article has been translated by AI.
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