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Samsung Electronics Likely to Ride Rising Chip Prices, Phone Sales to Report Best Quarterly Profit in 3 Years

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By Reuters | Updated: 6 October 2021

Samsung Electronics is likely to turn in its best quarterly profit in three years and a record revenue, on rising memory chip prices and brisk sales of its new foldable smartphones, analysts’ estimates show.

Operating profit for the world’s biggest memory chip and smartphone maker likely jumped to KRW 16.1 trillion (roughly Rs. 10,000 crores) in the quarter ended September, according to a Refinitiv SmartEstimate from 16 analysts, weighted toward those who are more consistently accurate.

That would be up 30 percent from KRW 12.35 trillion (roughly Rs. 77,300 crores) a year earlier and the highest since the third quarter of 2018. Revenue likely rose 11 percent to 74.6 trillion won (roughly Rs. 4,67,000 crores), a record high.

An unprecedented global shortage in semiconductor chips amid the pandemic has underpinned Samsung’s results and shares, which soared 45 percent last year and hit a record high at the start of 2021.

But the stock has dropped since then, compounded by losses in September when US peer Micron warned its memory chip shipments would slip in the near term, amid industry views that chip prices will tumble after peaking in July-September.

“Samsung shares have fallen due to Micron’s guidance but unlike Micron, Samsung internalises major components … and has other businesses like mobile and foundry to buoy performance,” said Hanwha Investment & Securities analyst Lee Soon-hak.

“Memory (chip) prices are seen rebounding next year after a short period of decline,” Lee added.

Samsung will announce preliminary results on Friday.

Chip division, smartphones

Samsung’s chip division is likely to report an operating profit of KRW 9.9 trillion (roughly Rs. 61,970 crores), an average of six analysts’ forecasts shows, up 79 percent from a year earlier, helped by rising memory chip prices and shipments.

Prices of DRAM chips, used in servers, mobile phones and other computing devices, jumped 7.9 percent versus the June quarter, while those of NAND flash chips that serve the data storage market rose 5.5 percent, data from research provider Trendforce shows.

Analysts also forecast a double-digit operating margin for Samsung’s chip contract manufacturing business as clients rush to secure production capacity.

Its mobile division likely saw about KRW 3.7 trillion (roughly Rs. 23,160 crores) in operating profits, analysts said, down from KRW 4.45 trillion (roughly Rs. 27,840 crores) a year earlier but up from the prior quarter’s KRW 3.2 trillion (roughly Rs. 20,020 crores) on foldable smartphones sales.

An estimated 2 million Galaxy Z Fold 3 and Z Flip 3 models were sold in a month since launching in late August, with South Korea topping sales followed by the United States, said Jene Park, senior research analyst at Counterpoint.

Market participants will be scouring Samsung’s full results later this month for an update on its planned $17 billion (roughly Rs. 1,26,800 crores) US semiconductor factory after sources said it was drawing closer to finalising the construction.

© Thomson Reuters 2021

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Samsung’s Posts Best Quarterly Profit in 3 Years Amid Rising Chip Prices

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By Reuters | Updated: 8 October 2021

Samsung Electronics on Friday flagged a 28 percent jump in its third-quarter operating profit to the highest in three years, driven by rising memory chip prices and display sales for new flagship smartphone launches. The preliminary result was up 26 percent from the second quarter, although just below forecasts, while the market reaction was further muted as analysts pencilled in a flat or slightly lower result this quarter on an expected fall in memory chip prices.

The world’s largest memory chip and smartphone maker estimated its July-September profit at KRW 15.8 trillion (roughly Rs. 99,190 crores), below a Refinitiv SmartEstimate of KRW 16.1 trillion (roughly Rs. 1,01,080 crores). It is the highest quarterly profit since the third quarter of 2018.

“The mobile business’ operating margin might have been lower than the market expected,” said Park Sung-soon, analyst at Cape Investment & Securities. “We will have to see marketing costs and what the mix of products Samsung sold was like.”

Rising memory chip prices and shipments, plus a jump in profitability at Samsung’s chip contract manufacturing business, likely raised the chip division’s operating profit by about 79 percent from a year earlier, analysts said.

Semiconductors accounted for about half of Samsung’s operating profit in the first half of the year.

Samsung shares pared early gains to be up 0.4 percent in afternoon trade. It is due to announce detailed earnings later this month.

The stock has fallen about 12 percent so far this year versus a 3 percent rise in the wider market, hurt by losses in September when US peer Micron said its memory chip shipments would slip in the near term.

Analysts said prices for memory chips are expected to tumble this quarter as demand for personal computers drops amid an expected easing in global lockdowns that have helped power sales, while smartphone shipments may also decline.

A bright spot next year is expected to be Samsung’s chip contract manufacturing business, which on Thursday announced plans to start producing cutting-edge, 3-nanometre chip designs in the first half of 2022, as it races against industry leader Taiwan Semiconductor Manufacturing Co to preempt advanced technology and win clients.

For Samsung’s mobile business, estimated sales of 2 million new foldable smartphones within a month showed demand for its foldable handsets captured more of the mass market than last year, analysts said.

However, this was likely offset by marketing costs and higher component costs due to the global chip shortage.

Samsung’s display unit likely saw solid results as key customer Apple ramped up orders before its late-September launch of the iPhone 13 series, analysts said.

Overall revenue likely rose about 9 percent from the same period a year earlier to a record KRW 73 trillion (roughly Rs. 4,58,230 crores), Samsung said in a filing.

© Thomson Reuters 2021

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Google Slams Antitrust Regulators for Ignoring Apple After Being Fined Over Its Android Dominance

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By Reuters | Updated: 27 September 2021

Alphabet unit Google on Monday criticised EU antitrust regulators for ignoring rival Apple as it launched a bid to get Europe’s second-highest court to annul a record EUR-4.34-billion (roughly Rs. 37,520 crores) fine related to its Android operating system.

Far from holding back rivals and harming users, Android has been a massive success story of competition at work, representatives of Google told a panel of five judges at the General Court in Luxembourg at the start of a five-day hearing.

The European Commission fined Google in 2018, saying that it had used Android since 2011 to thwart rivals and cement its dominance in general internet search.

“The Commission shut its eyes to the real competitive dynamic in this industry, that between Apple and Android,” Google’s lawyer Matthew Pickford told the court.

“By defining markets too narrowly and downplaying the potent constraint imposed by the highly powerful Apple, the Commission has mistakenly found Google to be dominant in mobile operating systems and app stores, when it was in fact a vigorous market disrupter,” he said.

Pickford said Android “is an exceptional success story of the power of competition in action”.

Commission lawyer Nicholas Khan dismissed Apple’s role because of its small market share compared with Android.

“Bringing Apple into the picture doesn’t change things very much. Google and Apple pursue different models,” he told the court.

“Google’s conduct denied any opportunity for competition,” he said, citing agreements which forced phone manufacturers to pre-install Google Search, the Chrome browser and the Google Play app store on their Android devices, and payments to pre-install only Google Search.

Android, free for device makers to use, is found on about 80 percent of the world’s smartphones. The case is the most important of the European Union’s three cases against Google because of Android’s market power. Google has racked up more than 8 billion euros in EU antitrust fines in the last decade.

German phone maker Gigaset Communications GmbH, which is backing Google, said its success was due to Android’s open platform and lamented the negative impact of the Commission’s decision on its business.

“The licence fee for the Play Store that Google now charges as a result of the contested decision represents a significant portion of the price of Gigaset’s smartphones aimed at price-sensitive consumers,” its lawyer Jean-François Bellis told the court.

Lobbying group FairSearch, whose complaint triggered the Commission case, was however scathing about Google’s tactics with phone makers.

“Google adopted a classic bait and switch strategy. It hooked (them) on a supposedly free and open source operating system subsidised by its search monopoly, only to shut that system to competition through the web of restrictions at issue in this case,” its lawyer Thomas Vinje told the court.

A verdict may come next year. The case is T-604/18 Google vs European Commission.

© Thomson Reuters 2021

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Apple, Tesla Suppliers Suspend Production in China to Comply With Power Usage Norms

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By Reuters | Updated: 27 September 2021

Several Apple and Tesla suppliers have suspended production at some Chinese factories for a number of days to comply with tighter energy consumption policies, putting supply chains at risk in the peak season for electronics goods.

Two major Taiwanese chipmakers, however, said their China facilities are operating as normal.

The development comes as tight coal supplies in China and toughening emissions standards have triggered a contraction in heavy industry in several regions, dragging on the country’s economic growth rate, analysts have said.

Apple supplier Unimicron Technology late on Sunday said three of its China subsidiaries stopped production from midday on September 26 until midnight on September 30 to “comply with the local governments’ electricity limiting policy”.

The Taiwanese maker of printed circuit boards said it did not expect significant impact as other plants would make up production.

Eson Precision, an affiliate of Taiwan’s Hon Hai Precision Industry (Foxconn), in a statement said it suspended production from Sunday until Friday at facilities in the Chinese city of Kunshan.

Concraft Holding, a supplier of speaker components for Apple’s iPhone and which owns manufacturing plants in Suzhou city, said it would suspend production for five days until noon on Thursday and use inventory to meet demand.

Chipmakers United Microelectronics Corp (UMC) and Taiwan Semiconductor Manufacturing Co told Reuters there was no impact at their China plants.

“UMC’s Hejian fab in Suzhou is currently running at full capacity utilization of 80,000 plus wafers per month,” said the Taiwanese firm, whose clients include Qualcomm Inc.

Two people familiar with the matter told Reuters that facilities in Kunshan of contract manufacturer Foxconn have seen a “very small” impact on production.

Foxconn had to “adjust” a small part of its capacity there, which includes the manufacture of non-Apple notebook computers, one of the people said, adding that the company has not seen any impact at other major production hubs across China.

The second person said the company had to move some of the Kunshan workers’ shifts in late September to early October.

Foxconn, a major Apple supplier, declined to comment.

© Thomson Reuters 2021

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Microsoft Surface Duo to Get Android 11 Before End of Year, Company Reportedly Confirms

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By ANI | Updated: 25 September 2021

After American tech giant Microsoft announced a new Surface Duo 2 this week that would ship with Android 11, the company has now committed to releasing the OS update for the original device this year.

A Microsoft spokesperson in a statement to The Verge, said, “We remain committed to providing updates to Surface Duo, and we’re working to bring Android 11 to existing customers before the end of this year.”

That’s not a firm release date, but then there was never one for Android 11 on the Surface Duo. Previous reports suggested it would land in the summer, but as we move closer to fall and there was no mention at Microsoft’s Surface event, it’s clearly taking longer than expected.

It would be exciting to see what Android 11 would bring to the Surface Duo. Android 11 has native support for dual-screen devices like the Duo, so it should improve some of the software experiences on the device.

The Verge reported that giving a brief look at the Surface Duo 2, it seems like Android 11 brings minor tweaks to Microsoft’s multitasking system, rather than an overhaul. The Surface Duo 2 now defaults to assuming that the right-hand screen is the primary one, but it’s not clear if that same change will come to the original Surface Duo.

While Microsoft has shipped a number of updates for the Surface Duo, it has still remained a fairly buggy device. Surface Duo users have complained of regular issues with multitasking and gestures, a screen turning off during book mode, and lockups using the fingerprint reader, as per The Verge.

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Lithuania Looks to Ban ‘Untrustworthy’ Phones After Chinese Censorship Concerns

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By Reuters | Updated: 25 September 2021

Lithuania’s Defence Ministry is drafting legislation to ban state institutions from purchasing “untrustworthy” equipment, after finding a censoring feature in a Chinese smartphone company’s flagship phone, Margiris Abukevicius, deputy minister at the Defence Ministry said.

The censoring capability in Xiaomi’s Mi 10T 5G phone software has been turned off for the “European Union region” but can be turned on remotely at any time, the country’s National Cyber Security Centre said in a report on Tuesday.

A Xiaomi spokesman said in a statement sent to Reuters on Wednesday its device “does not censor communications to or from its users”.

The Defence Ministry is now drafting the legislation to ban public institutions from procuring “untrustworthy” equipment, including smartphones, with a view to presenting it to the parliament for debate by the end of this year, Abukevicius told Reuters.

“It’s quite obvious that consequences of the legislation would be similar to those of the earlier legislation on 5G equipment,” he said.

Chinese telecommunications giant Huawei protested in May as Lithuanian parliament decreed only equipment approved by the government on national security grounds could be used for next generation 5G network in the country.

“It’s not news that Lithuania has made a political decision to cooperate in technology with NATO and EU countries, which are democratic and have a rule of law,” Abukevicius said.

The National Cyber Security Centre report said terms potentially subject to censorship by the Xiaomi phone’s system apps, such as the default internet browser, included “Free Tibet”, “Long live Taiwan independence” and “democracy movement.”

Shares of Xiaomi fell nearly five percent to HKD21.95 (roughly Rs. 200) on Wednesday, their biggest daily percentage drop since July 27.

China demanded last month that Lithuania withdraw its ambassador in Beijing and recalled its envoy to Vilnius after Taiwan announced that its mission in Lithuania would be called the Taiwanese Representative Office.

Taiwanese missions in Europe and the United States use the name of the city Taipei, avoiding a reference to the island itself, which China claims as its own territory.

US President Joe Biden’s national security adviser Jake Sullivan last week stressed support to Lithuania’s prime minister Ingrida Simonyte in the face of pressure from China.

© Thomson Reuters 2021

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Google Says Disabled People Can Now Use Android Phones With Face Gestures

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By Agence France-Presse | Updated: 24 September 2021

Using a raised eyebrow or smile, people with speech or physical disabilities can now operate their Android-powered smartphones hands-free, Google said Thursday. Two new tools put machine learning and front-facing cameras on smartphones to work detecting face and eye movements. Users can scan their phone screen and select a task by smiling, raising eyebrows, opening their mouth, or looking to the left, right or up.

“To make Android more accessible for everyone, we’re launching new tools that make it easier to control your phone and communicate using facial gestures,” Google said.

The Centers for Disease Control and Prevention estimates that 61 million adults in the United States live with disabilities, which has pushed Google and rivals Apple and Microsoft to make products and services more accessible to them.

“Every day, people use voice commands, like ‘Hey Google’, or their hands to navigate their phones,” the tech giant said in a blog post.

“However, that’s not always possible for people with severe motor and speech disabilities.”

The changes are the result of two new features, one is called “Camera Switches,” which lets people use their faces instead of swipes and taps to interact with smartphones.

The other is Project Activate, a new Android application which allows people to use those gestures to trigger an action, like having a phone play a recorded phrase, send a text, or make a call.

“Now it’s possible for anyone to use eye movements and facial gestures that are customised to their range of movement to navigate their phone — sans hands and voice,” Google said.

The free Activate app is available in Australia, Britain, Canada, and the United States at the Google Play shop.

Apple, Google, and Microsoft have consistently rolled out innovations that make Internet technology more accessible to people with disabilities or who find that age has made some tasks, such as reading, more difficult.

Voice-commanded digital assistants built into speakers and smartphones can enable people with sight or movement challenges to tell computers what to do.

There is software that identifies text on web pages or in images and then reads it aloud, as well as automatic generation of captions that display what is said in videos.

An “AssistiveTouch” feature that Apple built into the software powering its smart watch lets touchscreen displays be controlled by sensing movements such as finger pinches or hand clenches.

“This feature also works with VoiceOver so you can navigate Apple Watch with one hand while using a cane or leading a service animal,” Apple said in a post.

Computing colossus Microsoft describes accessibility as essential to empowering everyone with technology tools.

“To enable transformative change accessibility needs to be a priority,” Microsoft said in a post.

“We aim to build it into what we design for every team, organisation, classroom, and home.”

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