Samsung predicts first return to profit growth in two years – but thanks to chips, not phones

There’s good news and bad news for Samsung today. The good news: the company has forecast a reversal of its seven-quarter decline in profits, suggesting an impressive year-on-year hike of almost 80%.

The bad news is that, 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, like Apple, sell their phones … 

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.