Samsung's 3rd Quarter IM Revenue Hits 28 Trillion Won Driven by 'Z Fold·Flip3' Success

Samsung Electronics Announces Q3 Earnings

[Asia Economy Reporter Cha Min-young] Samsung Electronics recorded quarterly sales exceeding 70 trillion won for the first time in history in the third quarter, with the IT & Mobile (IM) division responsible for the smartphone business also achieving sales in the 28 trillion won range, driven by the success of the 3rd generation foldable smartphones. Despite the semiconductor component supply crisis continuing since the first quarter, foldable smartphones led the performance rebound.

According to Samsung Electronics on the 28th, the IM division posted sales of 28.42 trillion won and an operating profit of 3.36 trillion won in the third quarter. Sales decreased by 7% compared to the same period last year but increased by 25% compared to the previous quarter. Operating profit decreased by 1.1% year-on-year but improved by 0.12% quarter-on-quarter.

The high-end 3rd generation foldable phone new products, 'Galaxy Z Fold3' and 'Galaxy Z Flip3,' drove the overall smartphone sales increase. Domestic sales of the Z Flip3 and Z Fold3, released in August, surpassed 1 million units within 39 days of launch, setting the third fastest sales record following the historically successful 'Galaxy Note10' and 'Galaxy S8.' Global sales have exceeded 3 million units.

Growth in the Galaxy ecosystem product lineup, including wearables, PCs, and tablets, as well as mid-to-low-end lineups such as the Galaxy A series, also supported smartphone performance. The network division expanded overseas business into markets such as North America and Japan while continuously responding to domestic 5G mobile network expansion.

The improvement in operating profit margin compared to sales was not significant quarter-on-quarter. This is because the semiconductor component supply shortage caused by COVID-19 since the first quarter still affects smartphone shipments. Despite large-scale marketing strategies aligned with the foldable phone launch and the strong performance of foldable phones, this remains a disappointing aspect for Samsung.

For the fourth quarter, the smartphone market is expected to slow down due to the semiconductor supply shortage. Market research firm Counterpoint Research recently lowered its smartphone sales forecast for this year to a total of 1.41 billion units, with an annual growth rate of 6%. Previously, the annual sales volume was projected at 1.45 billion units, about a 9% increase from the previous year.

Tom Kang, an analyst at Counterpoint Research, noted, "The semiconductor shortage is affecting 90% of the smartphone industry and will impact total sales in the second half of this year."

Samsung Electronics plans to continue innovation in foldable products in the fourth quarter and further popularize them through unique differentiation such as the Bespoke Edition, aiming to establish foldables as an important category in the premium market. In the mid-to-low-end smartphone segment, Samsung will respond based on products optimized for diverse regional demands, including mid-to-low-end 5G phones.

Meanwhile, Samsung Electronics recorded consolidated sales of 73.98 trillion won and an operating profit of 15.82 trillion won in the third quarter. This represents a 10.5% increase compared to the same period last year, which had previously set the record for the highest quarterly sales.