Samsung Electronics flagged a leap of nearly 60 percent in third-quarter operating profits Thursday, as its mobile and chip business were boosted by US sanctions against its Chinese rival Huawei.
The South Korean tech giant said in an earnings estimate that it expected operating profit to reach 12.3 trillion won ($10.6 billion) for July to September, up from 7.8 trillion won in the same period last year.
The prediction would represent the firm’s biggest operating profit of any quarter for two years and was also ahead of analyst forecasts.
Samsung Electronics is crucial to South Korea’s economic health. It is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled conglomerates known as chaebols that dominate business in the world’s 12th-largest economy.
Its overall turnover is equivalent to a fifth of the country’s gross domestic product.
James Kang, senior analyst at Euromonitor International Korea, said Samsung’s rollout of its latest premium handset devices — the Galaxy Note 20 and the Galaxy Z Fold 2 — in August, coupled with strong sales of mid-range phones, led the firm’s third-quarter performance.
A Washington ban on foreign companies providing Huawei with US-origin technology, that came into effect on September 15 — cutting off essential supplies of semiconductors and software needed for making smartphones and 5G equipment — also provided a boost.
Kang Min-soo, an analyst at Counterpoint Research, said US sanctions against Huawei were becoming “a big factor” affecting the global smartphone market.
“For Samsung, it will be a good opportunity to increase market share in Europe, where it has been competing with Huawei in various price bands,” he added.
The firm’s memory business also benefited from the feud after Huawei rushed to stock up on Samsung-made semiconductors before the US restrictions kicked in.
“Huawei has stocked about