Samsung posts third-biggest quarterly profit in Q4 on chip sales
SEOUL, Jan. 24 (Xinhua) — Samsung Electronics posted the third-biggest operating profit in the company’s history in the fourth quarter thanks to brisk sales in semiconductors, which took up more than half of the total earnings, the company said Tuesday.
Consolidated operating profit reached 9.22 trillion won (7.92 billion U.S. dollars) in the October-December quarter, up 3.08 percent from a year earlier.
It marked Samsung’s third-biggest profit, following 10.16 trillion won tallied in the third quarter of 2013 and 9.53 trillion won in the second quarter of 2013.
Revenue inched up 0.03 percent over the year to 53.33 trillion won in the fourth quarter.
The semiconductor business posted 4.95 trillion won in operating profit for the December quarter, accounting for over half of Samsung’s total profit. It surpassed the division’s previous record high of 3.66 trillion won in the third quarter of 2015.
Demand for chips used in mobile phones increased amid higher semiconductor prices, a competitive edge in 18-nano DRAM chips and the mass-production in V-NAND flash memory chips.
The South Korean currency’s depreciation to the U.S. dollar helped Samsung enhance earnings. The weak currency raises repatriated earnings from overseas.
The won/dollar exchange rate gained above 1,200 won per dollar in the fourth quarter from around 1,100 won in the previous quarter, lifting Samsung’s profit by about 300 billion won.
The mobile unit’s operating profit was 2.5 trillion won due to the discontinuation of Galaxy Note 7 smartphones. It was up from 2.23 trillion won a year ago.
Samsung sold about 90 million mobile phones and 8 million tablet PCs in the fourth quarter, posting an average selling price of around 180 dollars for handsets.
Samsung said Monday that faulty battery caused the Note 7s to catch fire or even explode. The flagship Samsung phablet, which was launched in August, was discontinued in October as reports continued on the phones setting on fire or overheating while charging.
The one of the biggest debacles in tech history was estimated to have cost Samsung almost 6 billion U.S. dollars, but the company has endured the loss thanks to strong demand for its semiconductors and display panels.
The display panel unit logged 1.34 trillion won in operating profit, with the profit in the consumer electronics unit reaching 320 billion won in the fourth quarter.
For the whole year of 2016, Samsung recorded 29.24 trillion won of operating profit on revenue of 201.87 trillion won. The profit was up 10.7 percent from the previous year, with the revenue inched up 0.6 percent.
The 2016 operating profit was the second-largest in Samsung’s history, following 36.79 trillion won tallied in 2013. Samsung’s revenue topped 200 trillion won for five straight years through 2016.
Samsung plans to focus on semiconductors and display panels to increase its earnings this year, but it remains to be seen whether its smartphone business can be recovered ahead of its next flagship smartphone’s launch.
Samsung is widely forecast to delay the release of its Galaxy S8 smartphone to sometime in April in a bid to pay more attention to safety issues following the Note 7 fiasco. The Galaxy Note 8 can be rolled out by the year-end.
Samsung’s mobile business, which had accounted for around half of the company’s total profit, is now struggling to recover from the Note 7 debacle. (1 South Korean won = 0.00086 U.S. dollar)