‘Record high earnings’ Shadow of Samsung Electronics…Spare part business, 76% of overall profit
[ Park Jung Il comja77@ ] | 2017-10-16 10:55:12
Samsung Electronics once again recorded record-high earnings in the third quarter after the second quarter. However, if we look inside, we are increasingly reliant on semiconductor-related parts business, which is sensitive to market conditions. The future of Samsung Electronics is becoming uncertain, including the delayed detention of vice chairman Lee Jae-yong and the resignation of vice chairman Kwon Oh-hyeon.
According to the business and securities industries October 15, Samsung Electronics recorded sales of KRW 62 trillion and operating profit of KRW 14.5 trillion in the third quarter. Sales and operating profit increased by 1.64 % and 3.06 %, respectively, .
The company is expected to record other quarterly earnings in the fourth quarter. Samsung Electronics representative said, "We expect the display performance to improve with the increase in sales of smartphones using organic light emitting diode (OLED) panels as the semiconductor market continues to improve." Besides, sales of Galaxy Note 8, a new product, "We are also looking forward to improving the earnings of the mobile business."
Nevertheless, concerns over the expansion of parts business dependency are deepening. In the securities industry, the company expects total operating profit of KRW 14.5 trillion in the third quarter to reach about KRW 11 trillion only in the semiconductor and display divisions. This is up to 76% of the total.
After 2013, Samsung Electronics (DS), which has the largest annual record, has become increasingly reliant on the DS (device solution) division, which handles components and semiconductors. The DS division, which accounted for 27% of total operating profit in 2013, exceeded half of 2015 and 2016, and is likely to reach around 70% this year.
The situation is similar in sales. The sales portion of the DS division, which was 20% late in 2013, has risen about 10% point to 30% in the previous year and is expected to account for nearly half this year.
If the memory semiconductor market, which accounts for the majority of SEC`s semiconductor business, worsens, earnings are inevitable. In the case of memory semiconductors, prices will likely decline in 2019 as competitors, including Samsung Electronics, start full-fledged operations.
The smartphone and TV market, which is the main flagship product, is already losing market share due to the growth of competitors such as China, and display prices are falling due to the impact of China.
Samsung Electronics vice chairman Kwon Oh-hyeon, who announced his resignation on December 13, said, "Though it has the best performance, it is a fruitful decision and investment made in the past. And it seems to reflect this reality as well.
"As soon as Samsung Electronics is not able to find a future growth business, it will be the best in the world," he stated. "The world`s best companies such as Nokia, Motorola, Kodak, Sony cannot help but step on the train."
By Park Jung Il comja77@
[ copyright ⓒ The Digitaltimes ]
According to the business and securities industries October 15, Samsung Electronics recorded sales of KRW 62 trillion and operating profit of KRW 14.5 trillion in the third quarter. Sales and operating profit increased by 1.64 % and 3.06 %, respectively, .
The company is expected to record other quarterly earnings in the fourth quarter. Samsung Electronics representative said, "We expect the display performance to improve with the increase in sales of smartphones using organic light emitting diode (OLED) panels as the semiconductor market continues to improve." Besides, sales of Galaxy Note 8, a new product, "We are also looking forward to improving the earnings of the mobile business."
Nevertheless, concerns over the expansion of parts business dependency are deepening. In the securities industry, the company expects total operating profit of KRW 14.5 trillion in the third quarter to reach about KRW 11 trillion only in the semiconductor and display divisions. This is up to 76% of the total.
After 2013, Samsung Electronics (DS), which has the largest annual record, has become increasingly reliant on the DS (device solution) division, which handles components and semiconductors. The DS division, which accounted for 27% of total operating profit in 2013, exceeded half of 2015 and 2016, and is likely to reach around 70% this year.
The situation is similar in sales. The sales portion of the DS division, which was 20% late in 2013, has risen about 10% point to 30% in the previous year and is expected to account for nearly half this year.
If the memory semiconductor market, which accounts for the majority of SEC`s semiconductor business, worsens, earnings are inevitable. In the case of memory semiconductors, prices will likely decline in 2019 as competitors, including Samsung Electronics, start full-fledged operations.
The smartphone and TV market, which is the main flagship product, is already losing market share due to the growth of competitors such as China, and display prices are falling due to the impact of China.
Samsung Electronics vice chairman Kwon Oh-hyeon, who announced his resignation on December 13, said, "Though it has the best performance, it is a fruitful decision and investment made in the past. And it seems to reflect this reality as well.
"As soon as Samsung Electronics is not able to find a future growth business, it will be the best in the world," he stated. "The world`s best companies such as Nokia, Motorola, Kodak, Sony cannot help but step on the train."
By Park Jung Il comja77@