Samsung’s chip business boosts quarterly results

Samsung’s chip business boosts quarterly results

Revenue for the quarter rose 0.4 per cent

Credit: Dreamstime

South Korean tech behemoth, Samsung Electronics Co, has reportedly posted a record quarterly profit for its chip business in the January-March quarter, smashing expectations based on market demand for memory chips.

The company posted first-quarter profit to be approximately South Korean Won (KRW) 9.9 trillion (US$8.8 billion), with revenue for the quarter rising to 0.4 per cent to KRW 50 trillion.

According to Reuters, Samsung shares also reached new heights to record of KRW 2.134 million in late March on expectations of record earnings in 2017.

Expectations were based on limited production capacity for the memory chip industry, paired with rising demand for “firepower” from devices like smartphones.

Looking ahead, while Samsung won’t release detailed earnings results until the end of April, analysts predict the chip business to beat record again at KRW 5.8 trillion, which would boost the company to hit its best overall operating profit since 2013.

However, the company’s longer-term performance is likely to remain at the mercy of the success of its new Samsung Galaxy S8 smartphone, set to hit shelves on 21 April 2017.

The record profit for the chip business proves positive for the business, following the tumultuous year for the vendor after sales plunged due to the recall of the Note7 smartphone following battery issues.

In November last year, after dozens of devices across the world caught fire due to battery problems, sales in the third quarter of 2016 as a whole declined 14.2 per cent year on year, according to Gartner.

As reported by the research analyst firm, the vendor’s previous worst performance for smartphone sales was a 12.3 per cent drop in the fourth quarter of 2014.

However, at the time, IDC claimed that not all hope is lost.

Results from a survey undertaken by US consumers after Samsung halted its Note 7 production, revealed that while the company faces some short-term challenges, the controversy will not tarnish the brand in the long-term.

The survey showed that a majority of respondents said it would not impact future decisions to buy other, non-smartphone Samsung products such as televisions and appliances.

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Tags GartnerIDCsamsungGalaxy S8


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