Samsung set to post huge profit amid Note fire fiasco

Samsung is likely to forecast its best quarterly profit in nearly three years, analysts said, with robust memory chip sales easing the pain of the costly failure of a flagship smartphone.

The South Korean firm discontinued sales of the Galaxy Note 7 phones after some of the devices caught fire, warning of a $2.1bn (€2bn) hit to its profit in the fourth quarter of 2016 due to expenses tied to an ongoing global recall and lost sales.

But investors are betting a surge in sales of memory chips and organic light- emitting diode screens for smartphones will translate to strong earnings growth for the October-December period and through 2017.

Samsung’s operating profit likely rose for a second straight quarter to 8.4 trillion won (€5.44bn) over October-December, according to a survey of 15 analysts, up 37% from a year ago and the highest since the first quarter of 2014.

“We look for the memory business to post a big earnings improvement and contribute 50% of its (Samsung’s) total operating profit for Q416,” Daiwa said.

Memory chip prices have spiked recently on demand for more firepower on mobile devices. But it is the sales of the higher-end 3D Nand chips which have rallied significantly, helping Samsung rake in profits given it is ahead of its rivals such as Toshiba and SK Hynix in the production of these chips.

Samsung’s semiconductor profit likely surged to a record 4.5 trillion won for the fourth quarter and 13.1 trillion won for 2016, Eugene Investment said, adding chip earnings will grow further this year on firm demand.

HDC Asset Management’s fund manager Park Jung-hoon agreed the components business outlook appeared “pretty solid”.

— Reuters