Samsung posts record profits in Q1 2017 even as phone sales decline

Increased sales in the semiconductor business lead to Samsung's second-most profitable quarter.

Samsung has published its earnings results for the quarter ending in March 2017, and as it forecast a few weeks ago, Q1 2017 was very profitable for the company. Operating profit saw a massive year-on-year increase of 48% to $8.8 billion (9.9 trillion won), leading to Samsung's second-most profitable quarter ever and best-ever first quarter.

Net profit at $6.8 billion (7.68 trillion won) was also up 46% from the same period a year ago. Although profits increased significantly, overall revenue at $44.7 billion (50.55 trillion won) was a slight increase from Q1 2016's $44.01 billion (49.78 trillion won). Sales from the mobile unit declined, with the business posting an operating profit of $1.8 billion (2.07 trillion won), down 47% from the $3.4 billion (3.89 trillion won) it netted a year ago.

With the termination of the Note 7, Samsung had to rely on the Galaxy S7 for longer than intended, and the company had to reduce its price to stay competitive. That said, the manufacturer saw healthy sales of the mid-range Galaxy A 2017 as well as increased momentum in the mid- to low-end segments in emerging markets. Looking forward to Q2 2017, Samsung is bullish on Galaxy S8 and S8+ sales leading to increased profits and revenues. In addition to maximizing sales of the Galaxy S8, Samsung will launch a second flagship — theNote 8 — in the latter half of the year.

A bulk of Samsung's profits were from the semiconductor business, where the company saw increased demand for memory products. Overall profits from the division amounted to $5.57 billion (6.31 trillion won) on revenues of $13.8 billion (15.66 trillion won). Sales of DRAM and enterprise SSDs increased, as well as demand for 14nm application processors for mid-range phones and image sensors for flagships. Looking ahead, Samsung is counting on its recent 10nm node to drive growth, with the 14nm processors branching out into automotive, IoT and wearable segments.

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