Samsung Electronics reported on Thursday, April 27 that its profits for the first quarter surged to a three-year high, as its semiconductor business drew the highest income ever.
Driven by the strong chip division, Samsung's earnings for the first quarter from January to March 2017 soared 46 percent compared to the same period last year, hitting a record-high 7.7 trillion won ($6.8 billion).
Samsung Q1 Results Beat Expectations
The strong results beat expectations and mark the highest in more than three years, as Samsung hasn't had such a great performance since the third quarter of 2013. Sales increased only 2 percent compared to the previous year, but operating profit jumped 48 percent to 9.9 trillion won ($8.7 billion).
The impressive results come after a tough time for Samsung. The company sailed troubled waters upon recalling the explosive Galaxy Note 7 twice and eventually discontinuing it altogether because the battery would overheat and catch fire. The Galaxy Note 7 disaster dealt a heavy blow to the company's finances and reputation but it's apparently recovering quite well.
At the same time, Samsung also had another storm in recent months, as five of its top executives were indicted on corruption charges after being engulfed in a huge political scandal that fueled months of protests and the demise of Samsung's South Korean president.
Samsung Semiconductor Business Going Strong
Nevertheless, Samsung's chip division still managed to fire up a great profit surge although the first quarter is usually a slow one for chipmakers. Tight supplies globally, combined with high demand for microchips and computers, mobile devices and data servers, fueled the record-breaking performance.
For the first quarter of this year, nearly two-thirds of the company's entire operating income came from its chip division.
Samsung Galaxy S8 To Fuel Strong Q2
The company is now expecting strong results for the second quarter as well, mainly banking on the success of its latest flagship smartphones. The Samsung Galaxy S8 and Galaxy S8+ hit the market recently and are expected to be top performers.
Galaxy S8 and Galaxy S8+ racked up an impressive number of preorders and sparked hopes that they will make up for the fiery Galaxy Note 7 fiasco from last year. Reports of a Galaxy S8 red tint on the display and some Wi-Fi connectivity issues cooled off some of the enthusiasm, but it's expected to pick back up as Samsung releases software fixes.
"Looking ahead to the second quarter, the company expects to achieve growth on the back of continued robust memory performance together with improved earnings from the mobile business following the global rollout of the Galaxy S8 and S8+," says Samsung.
Other Samsung Announcements
Aside from its earnings results, Samsung also had some announcements regarding its corporate structure and shareholder returns. More specifically, Samsung decided not to turn into a holding company, and to cancel treasury shares.
The company rejected a call to split its business in two, but accepted some of the proposals hedge fund Elliott made, thus announcing on Thursday that it will cancel existing treasury sales worth more than $35 billion by 2018. Samsung also said it will stick to its current company structure, as its board of directors feared that turning into a holding company would have a negative impact on Samsung's competitiveness.