Samsung Is Flying High on Chip Profit, But Is a Crash Ahead?

Quarterly earnings surged again for Samsung Electronics, thanks to its record-breaking chip business. The South Korean company said Wednesday that its October-December earnings jumped 74 percent to 12 trillion won ($11.2 billion), compared with 6.9 trillion won a year earlier. It was slightly higher than analysts’ consensus of 11 trillion won, according to financial data provider FactSet.


Sales and operating profit also rose in line with Samsung’s earlier guidance. Sales rose 24 percent to 66 trillion won ($61.6 billion) and operating profit was up 64 percent to 15 trillion won ($14 billion).


Samsung’s flagship semiconductor business continued making record-high profits. The division, which supplies chips that help data centers, servers, mobile devices and computers save data and run multiple programs rapidly, generated 10.9 trillion won ($10.1 billion) in operating income during the quarter on sales of 21.1 trillion won ($19.7 billion), an unusually lucrative record for a manufacturing company.


Other divisions, however, reported lower profit or less impressive profit gains. Profit from its mobile division dropped as Samsung increased marketing spending to promote Galaxy phones, while television and display divisions posted small gains.


Profits have not suffered from the vice chairman’s bribery conviction. Samsung heir Lee Jae-yong, a vice chairman and the only son of the ailing chair, is waiting for an appeal ruling next week after receiving a five-year prison term in corruption scandals that led to the removal of the country’s president.


Samsung’s run of strong profit is not about to stop any time soon. For the current quarter, Samsung said its memory chip division will continue to see strong demand from data centers around the world while its mobile business will see an earnings improvement as the company is due to launch the Galaxy S9 smartphone in spring.


The company dispelled views that the memory chip industry may have passed its peak after…
Source: Mobile Tech Today

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