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samsung profits


Samsung Electronics forecasts record profits for Q4 of 2017, but the estimate missed analyst expectations.

The world’s biggest memory chip maker forecast operating earnings of 15.1 trillion won ($14.1billion) – up 64% from a year earlier.

However, while chip prices boosted margins, a stronger won weighed on the figures.

The record guidance comes despite a corruption scandal engulfing Samsung top leadership.

The operating profit forecast is slightly below the 15.9 trillion won estimated by analysts surveyed by Reuters.

The forecast keeps the South Korean company on track for record annual profits, in a year when prices for computer memory chips kept surging.

However, the 2018 outlook is less certain, with Samsung shares having fallen nearly 10% from their all-time high in November, as some investors bet on an end to the chip boom.

Image source Samsung

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Meanwhile, the market for smartphones and other mobile devices is facing increasing competition from Chinese rivals.

As well as the jailing of its heir apparent Lee Jae-yong for bribery and corruption, Samsung’s reputation was also hit by the global recall of its flagship Note 7 smartphone in 2016, following the fiasco with its overheating and exploding batteries.

However, the problems with the handset did not cause major disruption to Samsung’s finances, helped by its chip business as well as customers seeming unfazed by the incident.

Samsung Electronics is regarded as the jewel in the crown of the Samsung Group conglomerate, which is made up of 60 interlinked companies and is one of South Korea’s massive family-run businesses known as chaebols.

Samsung profits have been hit by falling sales for its smartphones and semiconductors.

The “difficult business environment and slowing IT demand” sent net profit for Q4 of 2015 down by 40% to 3.2 trillion won ($2.7 billion).

The tech giant warned it would be difficult to maintain profits this year at the same level as 2015.

Samsung revenue for 2015 fell 5.6 trillion won to 200.6 trillion won ($165.5 billion) compared with the previous 12 months.

Strong competition from cheaper Chinese rivals such as Xiaomi and Huawei at the bottom of the market, as well as Apple at the premium end, has dented Samsung’s smartphone sales.Samsung profits Q4 2015

The Galaxy S6, the most recent top-of-the-range handset launched in April 2015, failed to excite consumers and the company has struggled to maintain market share.

Samsung forecast single-digit percentage growth in both smartphone and tablet sales amid “softening demand and intensifying competition”.

“Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double-digit margin through releases of competitive devices,” Samsung said in a statement.

Samsung’s other core business, semiconductors, has also met headwinds following weaker demand for personal computers.

The company makes components for the iPhone, which is itself facing a slowdown in sales.

Apple said on January 26 it expected to report the first year-on-year decline in iPhone sales in the current quarter.

Samsung Electronics shares fell 2% in Seoul.