Samsung’s Q4 Profits Up by 50% Despite Note 7 Debacle : Robust Chip Business Comes to Rescue

Samsung

Samsung has announced the profits for its 4th quarter 2016 being 50% more, despite the recall of the Note 7.

The surprising increase is being attributed to its robust chip business.

Fourth Quarter 2016

Samsung has announced the earnings from its fourth quarter for 2016 today. According to earlier estimates, the company expected its profits to be around 7.8 billion dollars or 9.2 trillion won. However, the figures are actually more than the estimated amount. Samsung posts its consolidated revenues at 53.33 trillion won for the 4th quarter, with 9.22 trillion wons or $7.9 billion as the profits, for the year ending with December 2016. The amount is 50% more than the profits of the same quarter for 2015. The figure also marks the highest one in the past three years for Samsung.

Galaxy Note 7

Discontinuation of Note 7

After the discontinuation of the Note 7, there was a reduction of 96% in the profits of the mobile sector, during the previous quarter. Samsung stated that it would make an attempt to increase the earnings during the 4th quarter, with the help of sales of other devices like the Samsung Galaxy S7 and the Galaxy S7 Edge. The earnings soon started increasing due to increase in sales of LTE equipment, both in the domestic markets and in the overseas market.

Thanks to Chip Business

Most experts felt that the fourth quarter earnings of Samsung would surely take a fall due to the loss on account of the recalling of the Galaxy Note 7 devices. The loss is quite noticeable, but the impact has been considerably reduced due to the healthy chip business of the company. The earnings for the Q4 were mostly driven by component businesses of Samsung, including the chipset business as well as the display panel business selling OLED and LCD display screens.

Strength of Component Sales

Samsung has been able to show solid profits in spite of the unfortunate recall of the Note 7 devices. This was due to its policy of strengthening the component business and focusing on products that added value to the company. The chip business of Samsung has offered a profit of 4.95 trillion won or $4.25 billions, which is an increase of 77% when compared to the same quarter last year.

Expectations for Q1 2017

However, Samsung expects that the total earnings for the first quarter of this year will show a fall. This is because the company expects the earnings to come down on account of additional marketing expense in mobile phones. It is also being attributed to a fall in the sale of television sets on account of lower seasonal demand.

Samsung

New Avenues

Samsung also expects that the market will start slowing down this year. However, there will be new services, namely Ai, which will offer the company new avenues for expansion. Samsung has claimed that it will continue its focus on innovations related to hardware as well as software, for their complete lineup of devices. The company is also committed to offering complete consumer safety with safe designs that are checked at multiple levels.

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