Samsung Electronics said it expects fourth-quarter profit to fall due to weak server chip demand and rising smartphone competition, after posting its best quarterly operating profit in two years in the third quarter.
The world's top maker of smartphones and memory chips flagged a recovery in the mobile and chip markets next year.
But it said it remained wary of disruption from the coronavirus pandemic and US-China trade tensions in the short-term.
"Global demand is forecast to increase year on year, but uncertainties are unlikely to ease given the possibility of additional waves of the pandemic," Ben Suh, Samsung's executive vice president of investor relations, said.
Samsung said mobile chip demand would rise in the fourth quarter, as Chinese customers boost orders following US restrictions on Huawei Technologies.
But it added that server chip demand would remain weak due to large customer inventories.
"After the US restrictions against Huawei took effect in earnest, demand from Chinese customers has increased," said Han Jin-man, senior vice president of memory chip business.
Samsung has applied for its US license to export chips to Huawei and still waiting for the result, Han said.
Operating profit in the three months from July to September jumped 59% to 12.35 trillion won ($11 billion) on the back of Samsung's highest quarterly smartphone profit since 2014 at 4.45 trillion won ($4 billion).
In the third quarter, a near 50% surge in smartphone sales likely reflected gains in Samsung's share of the market as rival Huawei lost market share due to the US restrictions, while lower marketing costs amid the pandemic were also a factor, analysts said.
Samsung said its chip profit leapt 82% to 5.54 trillion won from a year earlier, as higher sales of low- and mid-end smartphones and inventory buildup from Huawei ahead of the US restrictions offset weak demand from servers.
Samsung's smartphone shipments in the current quarter are expected to drop about 5% compared to the previous period due to competition from Apple's newest iPhone 12 and a lack of new Samsung flagship models, analysts said.
The company's foundry business reported a new high for quarterly sales on recovered mobile demand, while its logic chip business said it plans to achieve double-digit sales growth next year.
Samsung's home appliance and TV business posted record earnings in third quarter, driven by "stay-at-home" trends and governments' expansionary policies such as unemployment benefits.
Revenue climbed 8% to 66.96 trillion won. Net profit rose 49% to 9.36 trillion won.