The company's Quarter 1 profit looks healthy after recovering from Note 7 withdrawal
Samsung’s profit for Quarter 1 is in very good shape, the Korean tech giant has announced. The figures come as welcome news following the debacle in which Galaxy Note 7s were widely discovered to be catching fire.
In fact, Samsung’s profit for Q1 of 2017 is set to be the company’s best quarterly profit for three years and is fifty percent better than the January to March 2016 numbers. Annual earnings could also hit record levels.
The improved figures are thanks, in large part, to sales in equipment like memory chips and components.
Galaxy S8 is not due until late April and had no direct effect on the Q1 profit.
It is, of course, possible that there was some indirect impact regarding positivity towards the Samsung in anticipation of Galaxy S8. And positivity was needed given the farce of the Note 7 problems, in which users ended up feeling like criminals just for carrying the devices onto planes (or trying to).
In October 2016, many airlines considered Note 7s such a hazard, given how prone they were to catching fire, that they felt moved to ban them from flights.
The previous month, Samsung had recalled some 2.5 million phones after reports of exploding batteries. The subsequent end to sales of Note 7 is estimated to have cost the company $17 billion, according to CNET.
Perhaps, more notable for tech enthusiasts is the fact that in Quarter 4 of 2016 Apple became the largest global smartphone vendor, a lead it had not held since 2014 when the first large-screen phones, the iPhone 6 and 6 Plus, were introduced to the market.
Chips are to thank for Samsung’s profit surge (but phones helped too)
Samsung’s profit, announced April 7, suggests the company as a whole is now on the up, regardless of 2016’s difficulties.
Samsung announced that operating profit was predicted to be 9.9 trillion won ($8.8 billion), which is better than analysts had expected. Revenue increased 0.4 percent to 50 trillion won, which was also slightly better than had been forecast.
“The semiconductor business was likely the main driver for earnings,” Reuters quotes Heungkuk Securities analyst Lee Min-hee as saying.
Samsung is the largest global vendor of memory chips, and the company also produces processors at the second highest rate in the world (only Intel produces more).
The chip division at Samsung is thought to have contributed a record 5.8 trillion won to the Quarter 1 figures.
As devices need more and more power with every passing year, the need for hardware and sophisticated equipment increases, which is good news for anyone producing components and chips in the way Samsung does.
However, Lee Min-hee pointed out that mid-to-low tier smartphone sales also aided Samsung in its quest to keep profits buoyant.
S8 set to be well ahead of Android rivals
The smartphone market will certainly be of huge importance for Samsung alongside its chips business, when S8 soon becomes available.
“There isn’t any significant rival from the Android side in the premium segment, and we see strong pent-up demand for a new Samsung device,” the Financial Times quotes Kim Young-woo, an analyst at SK Securities, as saying.
But despite Samsung’s profit for Quarter 1 putting to bed (for the most part) the memories of the Note 7 fiasco, the news for Samsung continues to be a mixture of good and bad.
Jay Y. Lee, the Samsung Group de facto boss, and son of the elderly chairman Lee Kun-hee, was arrested in February on suspicion of corruption. The case is linked to former President Park Geun-hye, who was recently removed from power following corruption allegations of her own.