Crisis Breakthrough
Regardless of the Galaxy Note 7 shock, Samsung Electronics’ operating profits exceeded 5 trillion won (US$4.37 billion) in the third quarter, driven by its semiconductors and display businesses. At a conference call on Oct. 27, the company said its annual investment in facilities this year will be at a record high of 27 trillion won (US$23.59 billion) after announcing its third quarter results. It will invest 13.2 trillion won (US$11.53 billion) in semiconductors alone, and 80 percent of them will go into memory semiconductors. The remaining 20 percent will be poured into system semiconductors, including the foundry business. Samsung Electronics will also invest 10.9 trillion won (US$9.52 billion) in the display sector.
Considering the fact that Samsung Electronics said it has invested 14.7 trillion won (US$12.84 billion) in facilities until the third quarter, the company plans to invest 12.3 trillion won (US$10.75 billion) in the fourth quarter alone. An official from Samsung Electronics said, “We will focus our investments in plants that produce 3D NAND flash memory chips and organic light emitting diode (OLED) panels, which have global demands that are highly likely to rapidly grow next year, in the fourth quarter.”
Samsung Electronics dominates 30 to 40 percent of the memory semiconductor market, including DRAM and NAND flash chips. Samsung Display, a subsidiary of Samsung Electronics, holds a more than 90 percent share in the global small and mid-size OLED display market. Samsung Electronics plans to improve its share in the semiconductor and display market by dramatically increasing the production of next-generation V-NAND and OLED products that require advanced technology and huge investment.
As Samsung Electronics has maintained the competitiveness in semiconductor and display businesses, the company has been able to survive despite the Galaxy Note 7 discontinuation that caused an operating loss of 2.6 trillion won (US$2.27 billion) in the third quarter alone. According to business results released by Samsung Electronics on the 27th, its sales reached 47.82 trillion won (US$41.78 billion) last quarter, while its operating profits recorded 5.2 trillion won (US$4.54 billion). The operating profits in the third quarter is the lowest level in eight months since 4.06 trillion won (US$3.55 billion) in the third quarter of 2014. Samsung Electronics posted 100 billion won (US$87.37 million) in operating profits at the IT & Mobile Communications (IM) division, which makes smartphones, to 100 billion won (US$87.37 million), down a whopping 95.8 percent from a year earlier. However, the company’s memory and system LSI business under the Device Solutions (DS) division recorded 3.37 trillion won (US$2.94 billion) in operating profits, while Samsung Display posted 1.02 trillion won (US$891.22 million), boosting Samsung Electronics’ operating profits to some 5 trillion won (US$4.37 billion). The operating profits of Samsung Electronics’ Consumer Electronics division, which makes TV and home appliances, amounted to 770 billion won (US$672.78 million).