SEOUL -- Samsung Electronics said Thursday that it plans to strengthen its foundry chip technology and add clients amid a global chip shortage disrupting production in key industries from autos to smartphones as it reported strong third quarter earnings.
The South Korean tech giant is raising its game in the foundry business -- which manufactures chips tailor-made for corporate clients -- and plans to make the components more cost-effective. The company announced earlier this month that it is scheduled to produce its first 3 nanometer-based chip designs for customers in the first half of 2022, while its second generation of 3 nm is expected in 2023.
"The foundry business is expected to continue to deliver strong improvements in results by securing technology leadership through 3-nm gate-all-around process and by meeting demand through active investments," Samsung said in a statement after announcing its full earnings for the third quarter.
"The company plans to improve earnings significantly by expanding supply of advanced processes of sub 5-nm process as well as increasing sales to global customers and normalizing prices for sustainable future investment," it added.
The company said that net profit during the July-to-September period soared 31.3% to 12.3 trillion won ($10.5 billion) from the same period last year.
Samsung also said that operating profit jumped 28% to 15.8 trillion won in the third quarter from a year ago, in line with guidance issued earlier this month. But revenue was revised higher, increasing 10.5% to 74 trillion won during the same period. Quarter-on-quarter, operating profit rose 25.9%, while revenue increased 16.2%.
Analysts say that Samsung's foundry business will triple in five years, adding several hundreds of customers.
"Samsung foundry is supporting clients with a stable platform, having a cooperative ecosystem," Lee Su-bin, an analyst at Daishin Securities, wrote in a report ahead of the earnings release.
Lee said that Samsung's client numbers are increasing sharply, reaching more than 100 this year from 35 in 2017. Lee expects that to hit over 300 in 2026.
By sector, memory chips led earnings, thanks to robust demand for DRAM and NAND chips amid the coronavirus pandemic. The mobile sector also contributed as Samsung's latest foldable smartphones -- the Galaxy Z Fold3 and Flip3, which launched in August -- have been popular globally.
Despite strong results this year, Samsung's stock price has underperformed as investors are concerned that a cyclical downtrend in memory chips could soon emerge and weigh on the company's value.
Samsung shares fell 0.29% in early morning trading after it released its earnings just before the market open.