SEOUL, Oct. 31 (Xinhua) -- Samsung Electronics, South Korea's tech behemoth, saw its third-quarter operating profit tumble in double figures amid the sluggish chip business that offset upbeat smartphone and organic light-emitting diode (OLED) performances, the company said Thursday.
Operating profit reached 7.78 trillion won (6.7 billion U.S. dollars) in the July-September quarter, down 55.7 percent from the third quarter of last year when Samsung posted a record quarterly profit.
From the previous quarter, the September quarter profit advanced 17.9 percent.
Revenue reduced 5.3 percent over the year to 62 trillion won (53.4 billion U.S. dollars) in the quarter, but it was up 10.5 percent from the prior quarter.
The ratio of operating profit to revenue, which gauges profitability, was 12.5 percent in the third quarter, less than halving 26.8 percent recorded in the same quarter of last year.
The profit posted a doubled-digit fall on a yearly basis on the continued weakness in the memory chip market, but it advanced on a quarterly basis due to stronger smartphone sales and improved utilization in mobile OLED screens, the company explained.
The strong U.S. dollar and the euro versus the local currency caused about 400 billion won (345 million U.S. dollars) worth of positive effects toward the quarterly operating profit, mainly in the component businesses.
Samsung's semiconductor business recorded revenue of 17.59 trillion won (15.2 billion U.S. dollars) on an operating profit of 3.05 trillion won (2.6 billion U.S. dollars) for the third quarter.
The revenue was down 29 percent from a year ago, while the operating profit plunged from 13.65 trillion won (11.8 billion U.S. dollars) tallied a year earlier.
The significant slump came as memory chip prices continued its downward trend amid the industry-wide weakness since the end of 2018. The logic chip business saw demand rise for image sensors and display driver ICs (DDIs), but also suffered from price declines in mobile application processors (APs), Samsung noted.
The display panel division posted 9.26 trillion won (8 billion U.S. dollars) of revenue on an operating profit of 1.17 trillion won (1 billion U.S. dollars) in the third quarter.
The profit was slightly up 0.1 percent from a year earlier with the solid sale of OLED screens, the improved capacity utilization and the reduced costs, which offset the continued loss in the large panel business.
The IT & mobile communications business, which produces smartphone, logged revenue of 29.25 trillion won (25.2 billion U.S. dollars) on an operating profit of 2.92 trillion won (2.5 billion U.S. dollars) for the September quarter.
The profit was up 31.3 percent from a year ago, surging 87.1 percent from the previous quarter thanks to the strong sale of Galaxy Note 10 and A series along with improved margins for mass-market models.
Samsung said its network business reported higher earnings on a yearly basis on growing commercialization of 5G services in South Korea.
The consumer electronics unit, which makes TVs, recorded revenue of 10.93 trillion won (9.4 billion U.S. dollars) on an operating profit of 550 billion won (474 million U.S. dollars) for the third quarter.
The revenue was up 7.0 percent from a year earlier, but the operating profit was down 1.8 percent on a year basis amid the pricing pressure from an intensifying competition in the global TV market that offset a growing shipment of premium models.
The total revenue and operating profit are different from the sum of each businesses' revenue and operating profit because of the exclusion of internal transactions.
Samsung said it expected demand for components to turn sluggish in general in the fourth quarter amid the weak seasonal effects while marketing expenses were likely to increase to address year-end smartphone sales.
The company's capital expenditure in the third quarter amounted to 6.1 trillion won (5.3 billion U.S. dollars), bringing this year's total spending to 16.8 trillion won (14.5 billion U.S. dollars), including 14 trillion won (12.1 billion U.S. dollars) in the semiconductor business and 1.3 trillion won (1.1 billion U.S. dollars) in the display business.
