Galaxy Note 7 Firestorm Causes Samsung Q3 Profits To Tumble 30 Percent

Samsung can thank its lucky stars that it is not singularly focused on the smartphone market. Had that been the case, its third quarter earnings report would have been devastating. As it stands, the South Korean electronics and semiconductor outfit saw its third quarter profit slip 30 percent to 5.2. trillion won (around $4.5 billion) as a direct result of the Galaxy Note 7 fiasco.

It is also fortunate for Samsung that it has a diverse smartphone lineup. While the Galaxy Note 7 recall proved costly and caused earnings in Samsung's mobile division to "decrease significantly" on a sequential basis, "continued stable sales" of its Galaxy S7 and S7 Edge help weather the storm. The can be said of Samsung's mid-range Galaxy A and J series, both of which experienced "steady growth," the company said.

Galaxy Note 7

"As for 2017, the company anticipates a turnaround with the launch of new flagship smartphones. Next year will also see expansion of Samsung Pay rollouts and cloud-related services as well as the introduction of artificial intelligence related offerings," Samsung said.

Samsung can also continue to lean on other market segments, namely displays and semiconductors. Samsung saw "significant growth" in its semiconductor business, which raked in 13.15 trillion won during the quarter. In particular, Samsung noted a "remarkable increase" in memory chip demand. Ironically enough Samsung may have played a role in rising demand for memory chips due to its Galaxy Note 7 recall, though the company credited high-density, high-performance mobile and server products, including V-NAND based SSDs for the uptick.

"In the fourth quarter, strong demand for NAND is expected to continue thanks to the expanded adoption of SSD in all segments and the growing need for high-density chips for mobile devices. Market conditions for DRAM will remain stable, despite low seasonality, as mobile DRAM demand is expected to be solid due to new smartphone launches and increased shipments of high-density memory chips.," Samsung added.

Samsung's display division collected 7.06 trillion won in revenue in Q3, resulting in a profit of over 1 trillion won. Its success was driven mostly by increased earnings of OLED panels and a jump in shipments of large-sized LCD TVs.