Samsung's profits soar but outlook is weak

Samsung Electronics posted its highest quarterly profit in two years on Wednesday, but the company is warning investors of tougher times ahead.

The Korean creator of smartphones and memory chips saw a 59% jump in profits from July to September.

This was off the back of its second-largest quarterly smartphone profit on record - at 4 billion dollars.

Analysts say the near 50% jump in smartphone sales reflects the way U.S. restrictions have hit Samsung's Chinese rival for smartphones, Huawei.

Profits from microchip sales also rocketed by 82% from a year earlier, as Huawei stockpiled chips from Samsung ahead of potential U.S. sanctions.

Analysts say the rise in revenue is also thanks to the global health crisis as it meant Samsung spent less on marketing and people working from home around the world drove demand for its tech.

Still, Samsung says its rebound may be short lived.

The company said on Thursday it expects its next quarter profits to stumble due to weak demand for servers and a rise in smartphone competition.

This month was the highly anticipated launch of Apple's newest iPhone 12, while Samsung has no new flagship models.

Server chip prices are also expected to fall due to a lack of demand.

Video Transcript

- Samsung Electronics posted its highest quarterly profit in two years on Wednesday, but the company is warning investors of tougher times ahead. The Korean creator of smartphones and memory chips saw a 59% jump in profits from July to September. This was off the back of its second-largest quarterly smartphone profit on record at $4 billion.

Analysts say the near 50% jump in smartphone sales reflects the way US restrictions have hit Samsung's Chinese rival for smartphones, Huawei. Profits from microchip sales also rocketed by 82% from a year earlier, as Huawei stockpiled chips from Samsung ahead a potential US sanctions. Analysts say the rise in revenue is also thanks to the global health crisis, as it meant Samsung spent less on marketing. And people working from home around the world drove demand for its tech.

Still, Samsung says its rebound may be short lived. The company said on Thursday, it expects its next quarter profits to stumble due to weak demand for service and a rise in smartphone competition.

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This month was the highly anticipated launch of Apple's newest iPhone 12, while Samsung has no new flagship models. Server chip prices are also expected to fall due to a lack of demand.