Samsung earnings strong thanks to chips

The Samsung Group's Seocho office building stands in Seoul, South Korea. Photo / Getty
The Samsung Group's Seocho office building stands in Seoul, South Korea. Photo / Getty

Samsung Electronics' fourth-quarter earnings more than doubled over a year earlier thanks to its brisk memory chip business and strong sales of other Galaxy smartphones that offset the costly Galaxy Note 7 recalls.

It posted 7.1 trillion won ($NZ8.44 billion) in net income during the October- December period, compared with 3.2t won a year earlier, the South Korean company said in a regulatory filing.

Sales stayed flat at 53.3t won. Operating profit surged 50 per cent over a year earlier to 9.2 trillion won, in line with Samsung's guidance earlier in January.

Samsung's earnings beat the forecasts even as it reels from the Galaxy Note 7 fiasco that has cost it at least $US5b since the third quarter.

On Monday, it blamed battery designs and manufacturing errors at suppliers for causing the phone to overheat or to burst into fire in some cases, prompting an unprecedented recalls and eventual discontinuation of the flagship phone.

In the absence of the Galaxy Note 7 smartphones, consumers snapped up Samsung's Galaxy S7 and S7 Edge, released in spring last year, as well as other cheaper Galaxy smartphones.

Samsung's mobile business bounced up from the previous quarter when the Note 7 debacle wiped out its mobile profit. The division generated 2.5t won in operating income during the final three months of 2016.

But the biggest force behind Samsung's forecast-beating earnings was its semiconductor businesses, which contributed more than half of the company's quarterly operating profit.

Samsung made five trillion won in operating profit from the semiconductor division alone, thanks to higher demand for memory chips from mobile device makers and server operators.

Demand for mobile devices pushed up demand for Samsung's advanced displays called OLED, which have been increasingly adopted by smartphone makers around the world. Samsung said its display business generated 1.3t won in operating income.

The company, the world's largest maker of smartphones, television sets and memory chips, said its earnings during the current quarter will likely decline because of weaker TV sales and an increase in marketing expenses for the mobile business.

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