Samsung Leans On Components To Drive Another Record Quarter

by Trefis Team
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SSNLF
Samsung Electronics
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Samsung Electronics (OTC:SSNLF) announced a record set of Q4 2017 results, driven by its semiconductor division, which continued to benefit from strong demand and tight supply of memory products. While the company’s revenues grew by about 29% year-over-year to $59.6 billion, its operating profit expanded by 72% to $13.7 billion. Below, we take a look at some of the factors that drove the semiconductor and display businesses and what lies ahead for Samsung.

While have created an interactive dashboard analysis which outlines the performance of Samsung’s major business segments over the quarter. Samsung reports its results in Korean won, but for the purpose of this analysis, we are converting this into U.S. dollars using the quarterly average exchange rate.

Trefis has a $2,025 price estimate for Samsung, which is slightly below the current market price.

See our complete analysis for Samsung

Samsung’s semiconductor business saw sales rise by about 48% to $19 billion, driven primarily by demand for DRAM memory from both the mobile and server markets. Samsung is also benefiting from the sales of more differentiated products such as 1xnm high-density server DRAM and 64-layer V-NAND. While Samsung expects near-term demand for memory to remain strong, driven by data center customers, there is a possibility that pricing for NAND will soften as the market transitions away from a phase of undersupply as new 3D NAND capacity comes online globally. That said, Samsung’s other semiconductor products could see some strength in the near term. For instance, the company expects to scale up shipments of its application processors and image sensors for flagship products over Q1. Additionally, it expects to expand mass production of its 10nm second generation process at its foundry operations.

Samsung’s display business also had a robust quarter, with revenues rising by about 57% year-over-year to $10.1 billion, driven by the supply of OLED displays to premium smartphones, including Apple’s iPhone X, although this was partially offset by a weak performance of the LCD business, which saw ASPs decline. However, the near-term outlook could be mixed, amid seasonally weaker demand for smartphones and reports that Apple is cutting production of the iPhone X.

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