Rabindra Dhungel, 10 october 2020. The biggest beneficiary of the US ban on Chinese company Huawei has been South Korean company Samsung.
Huawei, one of the two largest companies in the global market for mobile phone production and sales, has been banned in the United States, Europe and elsewhere, but Samsung has been able to cover the unprecedented opportunity to increase its market share.
Korean giant Samsung Electronics Co., Ltd., a maker of mobile phones and memory chips, said its third-quarter profit rose 58 percent. The third-quarter profit growth was the highest in two years, according to Samsung.
According to financial highlights released by Samsung on Thursday, it posted an operating profit of about 123 trillion won (US १० 10.6 billion) in the July-September quarter of 2020. This is Samsung’s strongest financial result since operating profit of 175.7 trillion won in the third quarter of 2018.
Financial analyst firm Refinitive Smart Estimate estimated that Samsung’s operating profit would not exceed 105 trillion won in the last quarter. Despite this, Samsung, which had an operating profit of 1.8 trillion won, increased its revenue by 6 percent to 660 trillion won from the same quarter last year.
Samsung released the data on Thursday amid limited financial data to be submitted to the regulator. It also said it would release details of the company’s earnings later this month.
Samsung has been trying to cover the market and revenue from the sale of flagship phones since the battery of the flagship series ‘Galaxy Note 7’ malfunctioned. Despite this, analysts predicted that this year’s Kovid-19 crisis would adversely affect Samsung’s revenue. But proving it wrong, it has made a two-year high in the last quarter.
Following the US crackdown on Chinese technology giant Huawei Technologies Co., Ltd., the US company Google also announced that it would not allow any of its apps and platforms to have access to support on Huawei’s upcoming set. But the decision to help the US government also cost Google वार्षिक 425 million a year in revenue from Huawei.
On the other hand, the Trump administration decided not to give Huawei access to the chip produced by the American company.
At the same time, sales of Huawei’s mobiles in many countries outside of China had started declining sharply. Analysts say that Samsung has benefited greatly from this. Because of this, on the one hand, Samsung was able to capture the lost mobile phone market, on the other hand, the US company said that it would not sell the chip to Huawei, and Huawei hastily ordered a large purchase of chips from Samsung.
Taking advantage of both, Samsung has managed to take billions of dollars in business from its closest rival Huawei.
As the physical distance increases due to Kovid, the use of e-commerce, e-learning, remote work and virtual meetings and conferences has increased significantly, which has also led to a significant increase in sales of mobile phones. This has greatly benefited Samsung, which has recently expanded its production of budget smart phones.
Expect four-year high profit from mobile
Samsung Electronics has made the profits of its highly competitive segment ‘smartphones’ a top priority.
Samsung expects the smartphone to make the biggest profit in four years, citing analysts, as it helped capture the market share of Chinese competitors as well as save large sums of money being spent on marketing.
“As soon as the US imposed the ban, Huawei began selling phones and services in the region, prompting many consumers to be reluctant to buy Huawei’s mobile phones,” said Tom Kang, an analyst at Counterpoint. This is sure to significantly improve revenue and profits from Samsung’s mobile sales.
On the other hand, Samsung has also benefited from the growing anti-China sentiment in India since the border dispute erupted last June. The market share and sales of Samsung’s products have also increased in India in recent times as Indian consumers’ disregard for Chinese home appliances and mobile phones has increased.
This has pushed Saomi, which is making the largest share of India’s smartphone market, as well as other Chinese mobile brands.
Samsung has increased not only mobile phone chip sales revenue. Compared to the previous year, Samsung’s chip market has grown by 7 percent this year, according to its financial summary released on Thursday.
Despite this, analysts are skeptical that Samsung will be able to maintain the momentum it achieved in the third quarter. As the price of memory chips plummets and new models of Apple iPhones begin to hit the market, both are expected to affect Samsung’s revenue and profit for the coming quarter.