Despite seeing its brand tarnished and anywhere between $2 billion and $5 billion wiped off its operating profit in the aftermath of Note 7 fiasco, Samsung of South Korea has managed to boost its fourth quarter earnings on the back of its semiconductor division and strong sales of the Galaxy S7 and Galaxy S7 Edge flagship devices.
Operating profits rose to $7.2 billion over the last three months of 2016 on sales of about $45.8 billion. Samsung’s mobile division captured $2.1 billion in operating income, a four percent year-over-year profit increase.
Samsung Mobile expects sales of its low-cost phones in the Galaxy A and J series to grow in the coming months. All in all, this was Samsung’s most profitable quarter in three years as the company has clearly bounced back from the global Note 7 recall.
A weaker Korean won relative to the U.S. dollar has helped, too.
Samsung’s semiconductor division is expecting increased demand in 2017. That unit used to exclusively churn out Apple-designed mobile chips for years before losing the Apple contract to rival TSMC. System LSI, Samsung’s semiconductor division, will continue to diversify its customer base in order to increase earnings.
Demand for Samsung’s memory chips is rising, too, while its in-house designed Exynos processors will power the infotainment systems in Audi’s next generation automobiles. Samsung is also buying U.S. auto parts giant Harman for $8 billion.
In 2017, the components businesses expect solid demand for value-added semiconductor products and for flexible OLED and large-size LCD panels. The company will seek to improve profitability in DRAM and NAND amid continued growing demand for data center servers and mobile devices.
Samsung’s display division has managed to increase earnings to $1.1 billion. Samsung Display is the world’s top producer of OLED screens for smartphones and tablets with a 90+ percent market share. The South Korean chaebol is expected to be a lone supplier of OLED panels for iPhone 8 until other suppliers like Sharp, Japan Display and LG Display ramp up OLED panel production in 2018.
“Robust sales of high-end, high-performance memory products and expanded process migration in V-NAND, plus strong shipments of OLED and large-size UHD panels contributed to profitability,” said the firm.
Earnings from flexible OLED panels are expected to increase year-over-year due to an expansion in supply, the company said. Samsung expects to meet stronger competition in the LCD market with value-added products focusing on 4K and large-size TV panels.
During a conference call with investors and analysts, Samsung confirmed that its upcoming smartphones would include artificial intelligence features while Galaxy S8 should offer “a differentiated design,“ in the company’s own words.
Just yesterday, the South Korean giant shared results of the investigation into Note 7 fires, which found two separate flaws within the batteries. The Galaxy maker confirmed that Galaxy S8 won’t be announced at Mobile World Congress next month.
Samsung’s mobile chief D.J. Koh said yesterday that Galaxy Note will continue despite the enormous baggage that comes with the Note name. “I will bring back a better, safer and very innovative Note 8,” he told CNET.
For the sake of completeness, Samsung’s president Park Geun-hye is currently under investigation in South Korea over charges that he paid bribes to an associate in order to win governmental support for a merger of affiliates in 2015.