Samsung makes record chip earnings

scrooge-mcduckSamsung Electronics saw record chip earnings which meant it could gloss over the Note 7 smartphone fiasco in the fourth quarter.

The outfit, which is involved in an influence-peddling scandal surrounding President Park Geun-hye, said it expects profit growth in 2017, despite challenges arising from political uncertainty.

The political uncertainty appears to be whether the South Korean government will make Samsung executives accountantable for the scam. So far, the smart money is that it will probably not do that.

Samsung Electronics said in a statement that all this was creating an “uncertain business environment” although it did hint that there was also a changing political landscape abroad too.

All this poses a challenge to the execution of mid- to long-term business strategies, such as M&A and investment decisions and developing new growth engines.

Even so, it flagged higher earnings this year after a slow first quarter, when steeper marketing costs will eat into its bottom line as it tries to rebuild its reputation from the failure of its latest flagship phone.

The world’s top manufacturer of smartphones, memory chips and flat-screen televisions is counting on the booming chip market to continue driving growth and give the mobile business breathing space to rebuild its premium lineup.

The company forecast “stable demand” in 2017 for memory chips, which hit an all-time earnings high in the October-December period.

Fourth-quarter operating profit jumped 50 percent $7.93 billion which was its highest in over three years and matching its prior guidance. Earnings from the chips business soared 77 percent year-on-year. Revenue were flat.

In its mobile business, operating profit rose 12 percent in the fourth quarter as models such as the Galaxy S filled the void following the discontinuation of the fire-prone Note 7 in October.

Samsung claimed that defective batteries caused the Note 7 handsets to overheat and catch fire, and indicated that it may delay the launch of its next premium Galaxy S smartphone as it overhauls its product safety systems.

While the mobile business is struggling, the positive outlook for memory chips used in mobile devices and OLED televisions propelled Samsung’s shares to a series of record-highs this month.