Memory chips power Samsung profit - Mobile World Live

Memory chips power Samsung profit

31 JAN 2018

Samsung’s mobile business somewhat disappointed in an otherwise solid set of Q4 2017 earnings for the South Korea-based vendor, as memory chip sales fuelled a record rise in profit.

The company reported a net profit of KRW12.26 trillion ($11.4 billion), up from KRW7 trillion in the same quarter of 2016, while total revenue hit KRW66 trillion, an increase of 23.7 per cent. Operating profit rose 63.7 per cent to KRW15.1 trillion, as forecast earlier this month.

Largely, the company’s success was driven by its semiconductor business, with the largest contribution from memory chips used in mobile devices and servers. The semiconductor unit posted KRW10.9 trillion in operating profit, more than double the Q4 2016 figure, on sales of KRW21.1 trillion. Shipments of OLED screens were also up, which is likely related to Samsung selling screens for Apple’s iPhone X, but the numbers were slightly offset by lower LCD display sales.

The growing strength of Samsung’s chip business, which Bloomberg noted is now the world’s biggest after surpassing Intel sales, was a welcome boost as its mobile unit did not experience the best of quarters. While the company doesn’t break out specific numbers, it revealed “smartphone shipments decreased due to the line-up optimisation of low-end models”.

Indeed, the company is facing increasing competition in emerging markets from Chinese competitors, and notably lost top spot to Xiaomi in terms of unit shipments in India during the quarter.

The company did, however, state shipments of “flagship products, such as the Galaxy Note 8, increased in Q4″.

Earnings in its networks business were also weak in the second half of 2017, as its customers’ LTE investments were concentrated in the opening six months of the year.

Operating profit for the mobile division slipped from KRW2.5 trillion in Q4 2016 to KRW2.4 trillion in the recent period, but revenue increased from KRW22.7 trillion to KRW25 trillion.

S9 launch and 5G
In an earnings call, Samsung said it expected its earnings from mobile to increase with the launch of the Galaxy S9, expected to be unveiled at this year’s Mobile World Congress in February.

The company added it will strengthen its upcoming smartphone line-up by differentiating core features such as the camera and its Bixby smart assistant, along with adopting “cutting-edge technologies, such as foldable OLED displays”. For its network business, Samsung added it will focus on expanding “the supply of 5G-ready network solutions into major markets including South Korea, the US and Japan”.

At group level, the company offered an optmistic mid- to long-term outlook, stating it expected its components business to experience strong demand driven by new applications, with more opportunities in connected devices and services based on artificial intelligence and IoT platforms.

The company also announced a 50-to-1 stock split aimed at making its shares more “accessible” to a wider range of investors.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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