'3rd quarter of 2020, Samsung Electronics 'joy', LG Innotek 'sadness'
Samsung Electronics, MLCC recovery, brisk 4th quarter outlook
LG Innotek Expects Highest Annual Performance in Q4


Samsung Electronics and LG Innotek, Korea's leading parts manufacturers, released their third quarter 2020 performances on the 26th and 28th, respectively. Unlike the first half of the year, the two companies' fortunes were mixed.
Samsung Electronics recorded consolidated sales of KRW 2.2879 trillion and operating profit of KRW 302.5 billion in the third quarter. This is a 3% and 60% increase, respectively, compared to the same period last year. It also significantly surpassed the market forecast of KRW 2.2208 trillion in sales and KRW 256.1 billion in operating profit.

On the other hand, LG Innotek recorded consolidated sales of KRW 2.2298 trillion and operating profit of KRW 89.4 billion in the third quarter, with sales down 8.8% and operating profit down 52.1% year-on-year. Operating profit also fell short of the market forecast of KRW 94.9 billion.

The two companies' performances diverged in the camera module business. Samsung Electro-Mechanics' module business division grew year-on-year, but LG Innotek's optical solutions business division did not. Samsung Electronics and Apple, whose biggest smartphone customers are Apple, were met with mixed emotions as Apple's iPhone 12 series launch was postponed to the fourth quarter.

Samsung Electronics' module division sales were 852.7 billion won, a 41% increase year-on-year, but LG Innotek's optical solutions division sales were 1.4584 trillion won, a 13% decrease year-on-year.

However, the outlook for the fourth quarter is favorable for LG Innotek. The iPhone 12 series sales have not disappeared, but have been postponed, and have recently been released and sold out in some regions. In Korea, the pre-order quantity of 200,000 units secured by the three telecommunications companies was sold out on the first day, showing great popularity.

Also, according to foreign media reports citing a Cinda Securities report on the 28th, the company is planning to increase production by up to 2 million units.

Samsung Electronics has not been able to gain an advantage in the competition with Apple for years. In addition, it has recently been struggling with challenges from Chinese companies such as Huawei. This year, Huawei has a variable that only exerts influence in the Chinese market due to US sanctions, but it is difficult to guarantee fourth-quarter performance.

In addition, there is news that Samsung Electronics is bringing forward the release date of the 'Galaxy S21 series' compared to previous years, and if the release is adjusted to January, we can expect it to contribute to sales in the fourth quarter of this year.

However, another factor that is considered in overall performance is multilayer ceramic capacitors (MLCC). Samsung Electronics has greater sales of multilayer ceramic capacitors (MLCC) than camera modules. LG Innotek does not have this business.

The MLCC market is expected to recover in the second half of the year, and Samsung Electronics is expected to perform well in the fourth quarter. LG Innotek has closed its lighting and LCD backlight unit businesses by reorganizing its light-emitting diode (LED) business. Although its annual sales ratio is small, it is expected to improve profitability as it was a business that was recording a deficit.