As a manufacturer of semiconductors, Samsung Electronics is benefiting greatly from the current shortage of computer chips.

The Korean electronics group increased its operating profit in the third quarter of the year by about 28 percent compared to the same period last year.

Patrick Welter

Correspondent for business and politics in Japan, based in Tokyo.

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The country's largest company tentatively reported an operating profit of approximately 15.8 trillion Korean won for the period from July to September. This is the best quarterly result since the third quarter of 2018. The result was roughly in line with the expectations of financial market analysts. According to the estimates, sales rose 9 percent compared to the same quarter of the previous year to about 73 trillion won. Samsung Electronics will provide final quarterly results and details at the end of October.

The semiconductor division is expected to be the engine behind the good result.

The prices for and the demand for memory chips increased.

Analysts also assume that Samsung has made progress in profitability in the sale of logic chips, which Samsung produces on behalf of third parties in the foundry business.

The shortage of semiconductors gives producers greater pricing power.

Samsung's semiconductor business had contributed about half of the operating profit in the first half of the year.

What is the smartphone business doing?

Like its competitors, such as TSMC from Taiwan, the company has announced that it will invest billions in new production facilities for computer chips. Samsung is currently trying to catch up in the foundry business with logic chips. It was only on Thursday that the South Koreans announced that they would be producing customer-designed logic chips using 3-nanometer technology from the first half of 2022 onwards. So far, only Samsung and Taiwan Semiconductor Manufacturing (TSMC) have mastered this miniaturization stage.

What contribution the smartphone business made in the third quarter is less clear. The folding smartphone models from Samsung are said to sell better than last year. This is countered by the fact that the prices for components have risen and that the shortage of semiconductor chips is putting a strain on the market on the supply side. The market research company Counterpoint reported at the end of September that some smartphone manufacturers only received 70 percent of the chips they ordered. Counterpoint predicts that the global smartphone market will only grow by 6 percent this year due to the lack of chips and no longer by the originally expected 9 percent.

Samsung's stock shed early gains on Friday after its earnings estimate was released and closed unchanged.

The share has lost around 14 percent of its value since the beginning of the year.

Analysts expect that the demand and the prices for the electronic memory components will decline at the end of the year.

That would also affect Samsung Electronics.