Samsung has today forecast a reversal of its seven-quarter decline in profits, suggesting an impressive year-on-year hike of almost 80%. But while the company itself hasn’t released any details on where the profit is coming from, analysts cited by the WSJ and elsewhere put it down to strong growth in sales of chips and displays – not phone sales.
This suggests that Samsung is making its money by helping other manufacturers sell their phones – with Apple’s record-breaking iPhone 6s sales doubtless playing a significant role. Apple split its A9 chip orders between Samsung and TSMC.
While the mobile-phone business isn’t likely to see a significant rebound as growth in global demand for smartphones cool amid saturated markets, Samsung’s earnings are being powered by strong growth in its chip business due to tight supply and firm pricing, analysts say. Samsung’s chip unit likely accounted for about half of the company’s profit in the third quarter, analysts said, while strong sales of displays to Chinese smartphone makers also contributed to its bottom line.
Samsung is estimating that its Q3 profits rose to 7.3 trillion Korean won ($6.3B), its first year-on-year growth since the same quarter in 2013.
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That’s how business works, Apple needed something from Samsung fair enough Samsung has to gain something out of that… but i’m wondering why reviewers are not testing the two chips (Samsung & TSMC) in order to see how they perform in real life…
actually they have and found the iphones with Samsung are slightly faster, and more efficient than the TSMC but so small of a difference its barely noticeable to the user.
dunno about more efficient, just saw an article with tsmc performing a lot better with extra 2 hours of battery life. but just 1 unit tested per manufacturer so who knows
Thanks to Apple, Samsung’s chip factory will be in a constant state of growth.
You have to love the logic of analysts. One one hand, they claim that Apple’s iPhone sales are somewhat disappointing ( compared to their own whisper number ) so the share price takes a hit, while on the other hand, the sales are said to be so large that the chip business is enough to change Samsung’s fortunes and also said to be one of the significant factors in widening the US trade deficit with China.
Apple’s iPhone business is so big that it can change Samsung’s fortunes and affect the US trade deficit, but it still isn’t big enough to impress the analysts.
Apple can change the fortunes of many smaller companies but it can’t do anything for itself because of its own huge size. I get this much, so what I’m looking at is an Apple investment that won’t give me any share gains. Apparently, Apple isn’t using its money to grow revenue to any degree when they could have easily done so. Instead, Apple chose to throw away $140 billion in buying back shares and is now saddled with $50 billion of debt with nothing to show for it (unless you think less total shares is somehow helping shareholders). Obviously, I don’t see how a stagnating share price is something that helps shareholders.
Fewer shares = dividend shared between fewer people, so each shareholder gets more.
I’ve invested in AAPL for many years and I’m quite happy with the share buyback policy. When Apple buys back a share, it no longer has to pay a dividend on that share. All the time that Apple is paying a greater dividend on the share than it is paying in interest on they money borrowed to buy that share, Apple is ahead of the game just on that single metric. When you also factor in the other advantages, it’s an excellent deal for shareholders.
If there were ever a time when it would be tax-efficient for Apple to repatriate it’s earnings from abroad, it could use some of that money to instantly wipe out it’s debt – if it chose to.
I smell something fishy with Samsung’s mobile division. They have pulled all stops including pre-empt the 6S release with the Note 5 and they are still hiding their numbers sold and profit.