Samsung chip business posts record operating profits fo…

Samsung Electronics has reported operating profits of KRW9.22 trillion (US$7.9 billion) for the fourth quarter of 2016 – the highest in 13 quarters – while its semiconductor business posted record profits of KRW4.95 trillion.

Samsung’s operating profits for fourth-quarter 2016 were 50.2% higher than a year ago, while consolidated revenues were about flat on year at KRW53.33 trillion. The company’s semiconductor business consisting of its memory chip and foundry departments saw its profits surge 76.8% on year in the fourth quarter of 2016.

"Fourth quarter earnings were driven by the components businesses, mainly the memory business and the display panel segment," Samsung indicated. "Robust sales of high-end, high-performance memory products and expanded process migration in V-NAND, plus strong shipments of OLED and large-size UHD panels contributed to profitability."

Samsung continued that for 2016, the company managed to achieve solid results despite the Note 7 discontinuation in the second half. Samsung noted the company has been strengthening its component business competitiveness by focusing on value-added products and widening the technology gap in the DRAM business as well as strategic investments in V-NAND and OLED.

Samsung reported operating profits of KRW29.24 trillion on revenues of KRW201.87 trillion for 2016, with profits rising 10.7% on year. Profits generated from its semiconductor business totaled KRW13.60 trillion in 2016, rising 6.3% from a year ago.

Looking forward, Samsung expects its components businesses to enjoy solid demand for value-added semiconductor products and for flexible OLED and large-size LCD panels during 2017. The company will seek to improve profitability in DRAM and NAND amid continued growing demand for data center servers and mobile devices. Meanwhile, Samsung’s system LSI unit will continue to diversify its customer base in order to increase earnings.

For display panels, earnings from high-end flexible OLED are expected to increase in 2017 thanks to an expansion in supply, and Samsung expects to meet stronger competition in the LCD market with value-added products focusing on UHD and large-size TV panels.

Although the growth of the global smartphone market is expected to slow in 2017, new services such as artificial intelligence (AI) will be a differentiating factor, Samsung indicated. The company’s mobile business will seek to strengthen its leadership in the premium market while strengthening its competitiveness in the mid- to low-end smartphone segments.

In addition, Samsung disclosed total capex executed in 2016 was KRW25.5 trillion, which came below its target of KRW27 trilion due mainly to the year-end investments carrying over to 2017. Investment in the display panel segment reached KRW9.8 trillion, while capex in the semiconductor business came to KRW13.2 trillion with an 8:2 split between the memory and system LSI businesses.

Samsung added its capex plan for 2017 has not been finalized.

Categories: Bits + chips Display components Display panel Displays IC manufacturing Memory chips

Tags: 4Q16 Samsung Samsung Electronics

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