Samsung reportts best quarterly profit in more than three years. The South Korean company’s stellar financial results beat expectations and reflect its ability to overcome the fiasco over its Galaxy Note 7s, which it pulled from the market when its batteries were found to be prone to overheating. That cost Samsung at least $5 billion.
Samsung Electronics is the world’s largest memory chipmaker and second-largest semiconductor company after Intel. Its semiconductor department generated ($5.6 billion in operating income in the first three months of this year, more than double a year earlier. So nearly two-thirds of Samsung’s operating income during the first quarter was generated by its semiconductor business.
The first quarter is typically a slow season for chipmakers but market circumstances were especially favorable for companies like Samsung that are positioned to quickly and efficiently mass produce microchips.
Global supplies were tight and consumer demand for more sophisticated and high-density mobile devices that are able to quickly multitask and process more images, videos and other data was strong. Data centers around the world are also handling growing amounts of data, with more and more gadgets connected to the internet.
“The semiconductor business will continue to see a boom for at least a year ahead and its earnings result is on a roll,” said Park Ju-gun, chief executive at CEO Score, a private corporate watchdog. The tight supplies and solid demand, pushed prices for Samsung’s key microchip products called NAND and DRAM up sharply, giving it fat margins. Such market conditions are unlikely to change in coming months, so analysts expect Samsung to rake in its best ever earnings in 2017.
For the January-March period, Samsung’s profit jumped 46 percent over a year earlier to $6.8 billion, compared with 4.7 billion won a year earlier. According to data provider FactSet, analysts had expected a net income of 7.1 trillion won. Sales rose just 2 percent over a year earlier while operating profit surged 48 percent to 9.9 trillion won $8.7 billion.
For the full year, Samsung said its components business such as memory chips and mobile-phone screens known as OLED will drive profits. Samsung is betting on the Galaxy S8 smartphone, which uses curved OLED screens that wrap around its corners. The S8 and S8 Plus with larger screens went on sale last week with strong pre-orders