Samsung Records a Profit of 64% on Chips

The Korean company is making a lot of money from its components business.

The Korean company Samsung is better known for its mobile phones but when we take a glance at its profit margins it is all about the chips. Samsung Electronics said its October-December operating profit jumped 64 percent to a record high, capping off 2017 with the biggest annual operating income and sales in its history thanks to the blockbuster semiconductor business. In its earnings preview Tuesday, the South Korean company put its operating profit at 15.1 trillion won ($ 14.1 billion) for the final three months of last year, compared with 9.2 trillion won a year earlier.

“Strong demand for high-performance memory chipsets for servers and flagship mobile devices was a contributing factor to the company’s overall robust performance,” Samsung said in a press release. The mobile segment didn’t fare quite as well. Phone shipments grew because of the Galaxy Note 8 and Galaxy J series, but revenue and earnings in that segment declined sequentially because more customers sought out mass-market smartphones instead of its pricier devices, Samsung said. Still, the numbers increased from the previous year.

Samsung’s record results come despite a tough year for the tech giant. It sells more smartphones and TVs than anyone else in the world, but it’s had some quality issues with some of its most popular devices. The most notable problem was the Note 7, its much-applauded phone that literally went up in flames. Samsung was forced to recall the Note 7 after a battery flaw caused dozens of the phones to explode or burst into flames, costing the company upwards of $5 billion in lost sales and other expenses.

Samsung’s also facing some uncertainty in its top ranks. Jay Y. Lee, its co-vice chairman and heir apparent, has been sentenced to five years in prison. Its other co-vice chairman and the head of its chip business, Kwon Oh-hyun, earlier this month said he would retire after three decades at the company. And Samsung’s chairman, Lee Kun-hee, has been in a coma since a 2014 heart attack.

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