South Korean's President Moon Jae-in talks at the inauguration of the world's largest smartphone factory – a Samsung plant in India. Photo: AFP/ Money Sharma

South Korean flagships Samsung Electronics and LG Electronics announced surging Q3 year-on-year profits today.

Samsung’s results are believed to have been boosted by its semiconductor business, while LG’s are understood to have been underwritten by home appliances and TVs.

Samsung announced in a regulatory filing a record quarterly operating profit, a 20% year-on-year increase for Q3 of 17.5 trillion won. That beat the previous record of 15.6 trillion won in Q1, 2018. The figure also came in slightly over market expectations of 17.1 trillion won, based on a survey conducted by Yonhap Infomax on 21 South Korean brokerages.

The muscular data was largely attributable to Samsung’s chip business, which is responsible for some 80% of profits thanks to strong seasonal demand, industry watchers told Yonhap news agency.

But Samsung’s smartphone division is expected to have suffered a weaker performance compared to 2017. It launched the Galaxy Note 9 in August but has been beset by intensifying competition in global markets, notably from cheaper Chinese rivals. However, the industry expects a revitalized smartphone business next year. There is high anticipation that Samsung will release models with foldable displays.

For 2018, the company is forecast to earn operating profits of 65 trillion won, well north of the 53.6 trillion won from 2017, Yonhap reported.

LG buoyant

Meanwhile, crosstown rival LG Electronics saw its Q3 operating profits rise 44% year-on-year, apparently thanks to solid sales from its TV and home appliance divisions.

Its operating profit was 745.5 billion won (US$659 million) in the quarter, compared to 516.1 billion won posted in Q3 2017, the company announced in a regulatory filing. Still, the number was below a market estimate of 771.7 billion won, based on a survey conducted by Yonhap Infomax on 15 securities firms.

Moreover, despite the year-on-year rise, the numbers represented a 3.3% drop from the previous quarter.

Industry watchers told Yonhap the quarter-on-quarter fall was due to weak demand for LG smartphones. While LG’s home appliances and TVs apparently delivered solid results, this quarter looks like it will mark the 14th consecutive quarterly fall in numbers for LG’s smartphone division.

The company did not provide detailed data for each business division; as with Samsung, finalized earnings will be made public later in the month.

LG Electronics is expected to post an overall profit of 3 trillion won for 2018.