Samsung posts highest profits in 3 years despite Note7 debacle
Samsung reported Monday that its Q4 2016 operating profits jumped by 50% to $7.9 billion, the company’s highest in three years.
This news comes just a day after the South Korean conglomerate reported that faulty batteries were behind the spontaneous combustions of its Note7 smartphones.
The jump in profit is especially impressive when you consider the stunning recall of Samsung’s Note7. How did the South Korean tech giant pull it off? By having its eggs in a bunch of different baskets, chiefly the memory and display businesses.
Samsung is a major supplier of memory chips and LCD and OLED displays for other tech companies. For example, according to Bloomberg, Samsung will be the only supplier of OLED screens for Apple’s (APPL) 2017 iPhones. The company also supplies the likes of Tesla and Apple with chips and memory.
And it was those business segments that performed the best in the last quarter. The semiconductor portion alone saw a 77% increase.
Samsung said its mobile unit, which was hit hard last quarter by the Note7 debacle, saw a 12% increase in operating profits. That’s largely due to sales of the Galaxy S7, which seems to still be selling well despite initial fears that the Note7’s issues would hurt the S7.
On Sunday, Samsung explained that the Note7’s problems stemmed from batteries with faulty internal separators that caused the positively and negatively charged sections of the batteries to touch, sparking a fire.
A second batch of Note7 devices was subsequently rushed to market and suffered similar battery issues. Samsung had to scrap the handset as it weathered a public relations nightmare.
In 2017, the company says, it will build on its product safety to ensure it doesn’t make the same mistake twice and expand the sale of high-end products with different designs. Samsung will also add artificial intelligence to its devices, which will likely come from the company’s acquisition of AI-maker Viv.
Viv also happens to have been founded by the same people who created Apple’s Siri.
As far as its next smartphone goes, Samsung will have to work to impress customers who may have felt burned (no pun intended) by the company’s fire-prone Note7.
Adding AI to a smartphone is a must-have at this point, as both Apple’s iPhone and Google’s (GOOG, GOOGL) Pixel already have fairly competent digital assistants. If Samsung is going to succeed with its upcoming Galaxy S8, it’s going to have to completely blow away its competitors.
We’ll find out more later this year, when Samsung reveals the S8.
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