Though Samsung might have hit the curb with a massive 96 percent decline in mobile and IT business profits, but the overall operating profits were balanced by the uptick in its components division. Due to the expanded sales of high-end component products, such as SSDs and flexible OLED panels, the profits increased on a Q0Q basis.
Let’s take an in-depth look at the individual segments of the components business to better understand the demand, growth, and future strategy of the Korean giant.
Starting off with the semiconductor business, Samsung reported KRW 13.15 trillion(approx. $11.5 billion) in revenue and KRW 3.37 trillion(approx. $3.1 billion) in operating profit for the third quarter. In comparison to the previous quarter, the profits from the chip business saw a massive 27 percent uptick this time around. This significant growth was led by increased demand for high-density, high-performance SSD products and sales of Exynos processors and image sensors.
This growth was further complemented by the continued surge in demand for crisp, high-definition display panels. In the current quarter ending September’16, the display segment posted revenues of KRW 7.06 trillion(approx $6 billion), coupled with KRW 1.02 trillion(approx $1 billion) in operating profit. The Korean giant reported an overall increase in demand and shipment of OLED displays, flexible displays, and large LCD TV panels. The improved demand and production of TV panels also contributed to the increase and steered the earnings right into positive figures.
Samsung is of the strong opinion that it can cope up and recover from the damage done by exploding Galaxy Note 7s with the launch of upcoming feature-packed flagship smartphones. But, even if the devices segment fails to deliver, the company is betting more heavily on the components segment to drive sales and earnings.
Looking forward to the fourth quarter, Samsung expects the strong performance of components business to drive growth in quarterly earnings on a year-on-year basis. The company will also focus on heavy investments on OLED and V-NAND with significant demand increase in 2017.
For the fourth quarter, Samsung says that the demand for high-density chips will increase and thus, it will focus on rampant production and deployment of 10-nanometer SoC tech. It will, however, still not lose focus on the utilization rate of 14nm tech. Since we’ve already started seeing 6 gigs of RAM being packed in phones, Samsung expects the demand for its industry-first 8GB DRAM package to rise in the following quarter.
Looking toward 2017, the semiconductor business expects to improve profitability with differentiated products and solid market demand for high-performance and high-density products.
Samsung [also] plans to improve earnings for the OLED business significantly YOY by expanding its supply of flexible displays to address demand for major smartphone customers,
reads the official press release.