Shares of semiconductor giant Samsung fall after it says third-quarter profit likely rose 28%

Earnings

A South Korean flag, left, and Samsung Electronics flag fly outside the company’s headquarters in Seoul, South Korea, on July 5, 2019.
Jean Chung | Bloomberg | Getty Images

Samsung Electronics shares edged higher on Friday after the company said its operating profit for the quarter that ended in September was likely 28% higher than a year ago at 15.8 trillion Korean won ($13.26 billion).

That’s set to be Samsung’s best quarterly profit in three years — since the third quarter of 2018 when Samsung posted a profit of more than 17.5 trillion won.

Still, Friday’s figure fell below analysts’ estimates of 16.1 trillion won, according to Refinitiv SmartEstimate.

Samsung shares rose more than 1% in early trade, but eventually pared some of those gains to trade at 0.42% higher.

Consolidated sales for the quarter likely rose to a record high of 73 trillion won — up 9% from a year ago.

The South Korean tech giant did not break down how each business unit performed, including its main profit-making semiconductor business.

But operations at the world’s largest smartphone and chipmaker have been affected by a global chip shortage and the coronavirus pandemic that shuttered some of its factories around the world.

“Both revenue and operating profit [are] lower than our estimate, and market estimate,” said SK Kim, executive director and senior analyst at Daiwa Capital Markets.

Samsung was partially affected by the semiconductor shortage, especially in its smartphone business, and likely faced some logistics problems for its consumer electronics unit, Kim said Friday on CNBC’s “Squawk Box Asia.” But rising semiconductor prices likely had a positive impact on Samsung’s components business, he added.

Daiwa has a price target of 110,000 won (about $92) a share for Samsung, implying more than 53% upside from Thursday’s close, as it expects higher semiconductor prices to drive the tech company’s earnings.

Chip shortage is beginning to affect the smartphone industry where the likes of Samsung and Apple had so far been shielded from the fallout by stockpiling critical components like memory chips.

Late last month, Counterpoint Research lowered its smartphone shipment forecasts for the second half of 2021, saying that some smartphone makers are struggling to receive all the components they ordered to make smartphones.

Full results for the September quarter are due later this month.

Samsung shares are down more than 11% year-to-date.

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