Samsung on track for record profit

Samsung is on track to post a record $9.3 billion quarterly profit as a rebound in its semiconductor business shields the South Korean tech giant from a slower smartphone market.

The world's biggest memory chipmaker is likely to see its semiconductor earnings charge to a three-year high – a much-needed shot in the arm – just as sales of its flagship Galaxy S4 smartphone begin to flag, analysts say.

The global chip market has rallied since late 2012 due to a supply crunch caused by years of cautious investment to support prices, and conversion of factory capacity to produce more profitable chips used in smartphones and tablets.

The semiconductor market further tightened following a fire in early September at a China plant owned by the world's number two memory chipmaker, SK Hynix.

"Stronger memory prices, made even better with the Wuxi DRAM (dynamic random access memory) fab fire, are driving Samsung's next leg of profit growth," Bernstein analyst Mark Newman said.

Samsung's chip business will likely post a profit of around 2.4 trillion won in the three months ended September, the highest since the third quarter of 2010, and accounting for around one quarter of overall earnings.

Contract DRAM chip prices jumped 9 percent in the second half of September from the first half of that month while spot prices soared 37 percent.

UBS estimates supply of DRAM chips by SK Hynix would shrink by 14 percent in the fourth quarter, plunging the overall DRAM market into a supply deficit of some 7 percent. The South Korean firm aims to fully restore operations in November.

"It has become more of a seller's market as there are now only just a couple of major memory chip makers left," said Byun Han-joon, an analyst at KB Investment & Securities. "The upcycle could last longer than many had initially thought."