Samsung Q4 2016 earnings show chip business absorbed impact of the Galaxy Note 7

Samsung Electronics announced its fourth quarter 2016 earnings today. As per the guidance released earlier this month, Samsung expected to post an operating profit of 9.2 trillion won ($7.8 billion) but the actual figure has turned out to be slightly higher than its estimate. Samsung has posted 53.33 trillion won in consolidated revenue for the quarter and 9.22 trillion won ($7.9 billion) in operating profit for the quarter ending December 2016. The figure is 50 percent higher than the same quarter in 2015 and is the highest for the company in three years.

Many believed that Samsung Q4 2016 earnings would take a big hit due to the financial impact of the Galaxy Note 7 and while it’s still noticeable, the company’s robust chip business has absorbed much of that impact. Samsung points out that fourth quarter earings were primarily driven by its component businesses which include the chip business and the display panel business that sells OLED and LCD screens.

The company says that it achieved solid results in 2016 despite the discontinuation of the Galaxy Note 7 because of its continuous efforts over the past few years to strengthen its component business competitiveness by focusing on value-added products. On consolidated revenue of 14.86 trillion won the chip business brought in 4.95 trillion won ($4.25 billion) in operating profit, a 77 percent year-over-year increase.

Samsung also points out in the earnings release that its mobile business saw its earnings increase YoY due to continued robust sales of the Galaxy S7 and the Galaxy S7 edge as well as improved profitability in the mid-to-low end segment.

Samsung expects overall earnings to decline quarter-over-quarter in Q1 2017 as it projects earnings in set businesses to decrease due to increased marketing expenses in the handset business and sales decline of TVs due to weak seasonal demand.

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