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Samsung Electronics Co. Galaxy Z Flip smartphones are displayed during the Samsung Unpacked product launch event in San Francisco, California on February 11. (Photo: Michael Short/Bloomberg)

Samsung’s profit beats estimates after US sanctions hit rival Huawei

Samsung Electronics Co. Galaxy Z Flip smartphones are displayed during the Samsung Unpacked product launch event in San Francisco, California on February 11. (Photo: Michael Short/Bloomberg)

Samsung Electronics Co reported earnings that beat analyst estimates after the South Korean tech giant’s mobile and chip businesses benefited from US restrictions on Huawei Technologies Co.

The world’s largest manufacturer of memory chips and personal electronics posted an operating income of 12.3 trillion won (US$10.6 billion) in the three months ended September, beating the 10 trillion won average of estimates. Sales for the quarter were 66 trillion won, according to preliminary results released Thursday. The company didn’t provide net income or break out divisional performance, which it will report later this month when it releases final results.

A Samsung smartphone during a media preview event. (Photo: Michael Short/Bloomberg)

Huawei overtook Samsung to become the world’s largest smartphone maker in the second quarter, but the Korean giant is projected to regain the crown after its Chinese rival lost access to the most advanced components that go into its Android devices. Samsung is expanding its market share in India, where consumers are growing hostile to Chinese products because of geopolitical issues. Its memory business also benefited after Huawei stocked up on semiconductors ahead of American sanctions kicking in last month.

“Huawei has stocked about six months’ worth of extra inventory before the US ban took effect on Sept. 15,” said MS Hwang, an analyst at Samsung Securities. “Huawei’s purchases are offsetting weakness in server-use demand and are devouring market inventory, which should affect prices down the road.”

— Bloomberg