Samsung Withstands Scandals to Report Higher Profit and Revenue

Samsung Withstands Scandals to Report Higher Profit and Revenue
Fotolia

Samsung posted its best operating profit in almost four years on robust sales of memory chips and displays, showing that the core businesses remain stable even as its mobile unit recovers from a costly recall and the trial of the group’s de facto chief, according to Bloomberg.

Operating income rose 48 percent to 9.9 trillion won ($8.74 billion) in the three months ended March, the company said in preliminary results. That compares with the 9.18 trillion-won average of analysts’ estimates compiled by Bloomberg. Rising demand for memory chips and organic light-emitting diode screens helped to fuel a rise in sales to 50 trillion won in the quarter, compared with the 49.5 trillion won analysts expected.

The results also underscore how the electronics conglomerate is recovering from last year’s Note 7 crisis, when some smartphones burst into flames and forced Samsung to pull it from shelves. That was followed by the arrest of de facto chief Jay Y. Lee in February in connection with an influence-peddling scandal.

Samsung, which lost its global lead in smartphones to Apple in the fourth quarter, is now counting on its latest flagship phone, the Galaxy S8, to repair its reputation. The new smartphone, which didn’t debut until after the end of the quarter and isn’t reflected in the figures, will still face tough competition from Apple and up-and-coming rivals such as Huawei and Oppo. The S8, which features a bezel-less display and voice-enabled digital assistant, was unveiled last week and will ship later this month.

Korea posted record exports for semiconductors and OLED displays in the first quarter, its trade ministry said last week, without naming the manufacturers. SK Hynix is Samsung’s main domestic rival for memory chips while LG also produces displays. Samsung posted its best operating profit in the third quarter of 2013 when it earned 10.2 trillion won. Samsung won’t provide net income or break out divisional performance until it releases final results later this month.

Samsung leads the global semiconductor market, which is largely divided into DRAM and NAND sectors. While investment from Chinese companies threatens to drive down memory chip prices, the market will probably remain profitable for at least the next couple of years, according to IHS Markit. DRAM chips, along with NAND flash memory, are used in smartphones, tablets, personal computers and game consoles.