Samsung reported a massive operating profit of around $14 billion in the fourth quarter—gains largely driven by the company’s sales of chipsets. Indeed, research firm Gartner said that Samsung is now the world’s largest semiconductor company: Samsung passed Intel during the period, which represents the first time Intel has lost the leading position in the semiconductor market since 1992.
However, profits fell in Samsung’s mobile business, which includes sales of both phones and network equipment. Samsung blamed the decline in its mobile business on increased marketing expenses and weak LTE equipment sales. But Samsung predicted sales would rise in the coming months.
As CNBC pointed out, Samsung’s operating profit was largely in line with expectations, and was largely due to strong demand for its memory chips for data centers and smartphones. Samsung’s semiconductor business has grown into a major profit center for the company.
Gartner reported that the worldwide semiconductor market totaled $419.7 billion in revenue in 2017, a 22.2% increase from 2016, largely due to demand for memory chips. But Gartner’s Andrew Norwood warned in a release that memory pricing will weaken this year as China ramps up its memory production capacity. “We then expect Samsung to lose a lot of the revenue gains it has made,” he said.
In its mobile business, Samsung reported a 3.2% year-over-year decline in operating profits. But the company offered a bright outlook for its mobile business.
“Looking ahead to 2018, demand for smartphones is expected to rise thanks to growing replacement demand for premium smartphones. In order to expand the sales of premium smartphones, Samsung will strengthen product competitiveness by differentiating core features and services, such as the camera and Bixby, and reinforce the sell-out programs and experiential stores,” the company wrote in its earnings release. “In addition, Samsung plans to continue optimizing its mid- to low-end lineup and enhancing productivity in order to achieve qualitative growth of the smartphone business.”
Samsung is widely expected to announce its new Galaxy S9 flagship smartphone at the upcoming Mobile World Congress trade show in Barcelona, Spain.
And in networks, Samsung also predicted improvements. “Samsung aims to strengthen its business foundation by supplying LTE base stations, mainly in North America, in the first quarter. For 2018, the company will focus on continuing to expand the supply of 5G-ready network solutions into major markets, including Korea, the U.S., and Japan,” the company wrote.