Samsung reports strong Q4 earnings as chip sales surge
Samsung Electronics has reported another quarter of record earnings on strong memory chip demand, defying concerns that the semiconductor industry may have topped out amid increasing output.
The world’s largest memory chipmaker also remained upbeat over the industry outlook as more processing power is required for mobile devices and computer servers, although prices of Nand flash memory chips used in smartphones and other mobile devices were falling.
Samsung expects the memory boom, which started in the second half of 2016, to continue throughout this year but the stronger Korean won trading at a three-year high against the dollar may weigh on its earnings.
“Looking ahead, the first quarter, despite being a traditionally slow season, is expected to show strong demand for memory products used in datacenters,” the company said in a statement on Wednesday.
The strong results came just a few days before the appeal verdict of Lee Jae-yong, Samsung’s de facto chief, who was last year sentenced to five years in prison for bribing South Korea’s former president. On Monday, a Seoul court will decide whether to release the Samsung vice chairman and scion of the conglomerate’s founding family.
Operating profit at the technology giant surged 64 per cent from a year earlier to Won15.2tn ($14.1bn) in the last three months of 2017, whiles sales grew 24 per cent to Won66tn. Samsung’s operating profit jumped 83 per cent to Won53.7tn for the full year 2017 as sales grew 19 per cent to Won239.6tn.
Memory chips were the main driver of Samsung’s earnings, accounting for about two thirds of its operating profit. Operating profit at its semiconductor division more than doubled from Won4.95tn a year earlier to Won10.9tn in the fourth quarter.
Operating profit at the mobile division slightly fell to Won2.4tn but Samsung is trying to revive momentum of its mobile business by launching a new flagship smartphone in February as fears of a faltering chip cycle pressure Samsung’s stock, with its share price currently down 13.5 per cent from its all-time high of 2.88m in early November. Operating profit at the display division rose slightly to Won1.4tn thanks to higher sales of OLED panels.
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