Samsung Sees a Surge in Sales After Rival Huawei’s Ban
Korean tech giant Samsung Electronics has reported a 59bn (£45.4bn) revenue in its third quarter. This high revenue was driven by a 50% increase in smartphone sales. Microchip profits also skyrocketed at 82%.
Samsung Electronics posted a net profit of $8.3bn during the third quarter. That is a 49% surge compared to the same period last 2019. Moreover, their chip and mobile businesses were likely improved by United States sanctions against Huawei, its Chinese rival.
The sales increase likely reflects the company eating into Huawei’s U.S. market share, as United States restrictions hampered the Chinese telecom provider. Ahead of the American sanctions, it has been stockpiling chips.
Back in August, the Department of Commerce of the United States said it would impose sanctions on foreign companies that sold chips to the Chinese company without acquiring a license. Donald Trump’s administration has targeted a big number of Chinese tech companies over national security matters, including WeChat, TikTok and Huawei.
Samsung also saw a growth in its premium television and appliance sales during the July to September period.
Samsung’s brilliant results come in the middle of a consolidation in the United States’ microchip field. Microchips offer a wide range of applications and are found on retail items such as consumer electronics and smartphones. It can also be used in data centers and other commercial infrastructure.
This week, AMD, a chip making giant, announced that it will purchase Xilinx for an amount of $35bn. Last month, Nvidia, a graphics chipmaker, agreed to purchase Arm for $40bn. The arm is a British mobile chipmaker from Softbank. This has been driven by AMD and Nvidia’s increasing share costs.
Some analysts believe consolidating the United States industry can push the government of China to invest more money in microchip technology. According to Lowy Institute research fellow Natasha Kassam, that can result in development and research acceleration. Furthermore, reliable chipmakers have done a great job throughout the coronavirus pandemic, as work-from-home policies increased the demand for specific chips.
Apart from Samsung, SK Hynix, also from Korea, recorded high profits in the second quarter, back when the world first succumbed to coronavirus restrictions. Furthermore, Micron Technology, a U.S.-based firm, beat its own quarterly expectations.
Though, Samsung has predicted more difficult times ahead, with decreasing fourth quarter profits. The company expects declining chip demand from customers, and more competition in consumer electronics and mobile phones.
The third quarter records were released one day after Lee Kun-hee’s burial. Lee Kun-hee is the chairman who helped Samsung turn into an international powerhouse. His death can force a shakeup. His heirs might be forced into dividend payments or asset sales to pay a bigger inheritance tax bill.
Some lingering questions also surround Lee Jae-Yong, his successor. He has been accused of fraud twice over his participation in a merger deal last 2015. He is presently awaiting trial.
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