With record-high earnings, Samsung fixated on AI chips, foldable phones

Tech February 03, 2018 12:00

By The Korea Herald/ANN

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SEOUL - South Korean tech giant Samsung Electronics' facility investment is expected to decrease from last year's 43.4 trillion won.

Bolstered by an all-time high operating profit of 53 trillion won ($49.6 billion) in 2017, Samsung Electronics’ top management displayed an upbeat mood for the launches of new innovative products, including chips that support artificial intelligence and foldable organic light-emitting display smartphones, this year during a conference call on Wednesday.

After announcing that it posted 239 trillion won in consolidated sales and 53 trillion won in operating profit last year, the South Korean tech giant vowed to earn a larger profit this year with upcoming flagship products featuring technological advancements.

According to the plan, Samsung will launch foldable smartphones with OLED panels and Exynos chips that are enhanced with neural processing units that support AI applications this year.

“Samsung will continue to make differentiating points by launching cutting-edge products including foldable smartphones this year,” an executive at Samsung Electronics said during the call.

An official from its subsidiary Samsung Display added that the display unit is developing a variety of applications of foldable displays in order to meet customers’ demand.

“The company is preparing for a new production line for foldable OLED panels,” the official said. “But nothing’s confirmed about when to begin operation.”

Samsung will also introduce Exynos application processors that adopt NPUs for larger data processing in digital devices that provide AI functions, and other new NPU-adopted chips specialized for connected vehicles and consumer electronics, the company said.

“We expect AI technologies to spread from mobile devices to consumer electronics and vehicles starting 2019,” an official said. “Responding to the trend, the company will launch Exynos processors that support facial recognition and intelligent image processing functions this year, and further introduce exclusive NPUs for other electronics and automobiles.”

As an outlook for the memory market this year, Samsung’s biggest cash cow, the company expects stable supply and demand conditions to continue due to strong demand for server products and trends toward high-specification mobile products.

The company plans to increase the competitiveness of DRAM products by expanding its 10-nanometer-class process migration at its fabs. With NAND flash chips, the firm is to focus on supplying profitability-oriented products, while continuing to expand its 64-layer migration.

However, Samsung announced its investments for this year would decrease from last year’s.

Samsung reported the annual investment in facilities stood at 43.4 trillion won, which breaks down to 27.3 trillion won in semiconductor and 13 trillion won in display.

“The investment was larger than before due to construction of the new Pyeongtaek fab, expansion of the foundry process lines and OLED facilities last year,” said Robert Yi, executive vice president for investor relations at Samsung Electronics. “Although our capital expenditure for 2018 has not yet been finalized, we expect the total amount to decrease on a year-on-year basis.”

According to the regulatory filing, Samsung’s fourth quarter net profit came at 12.25 trillion won, up from 7.08 trillion won a year earlier. For the whole of 2017, the net profit reaches 42.18 trillion won, up 85.6 percent from 2016.

The operating profit also broke records, by reaching 15.15 trillion won in the fourth quarter and 53.65 trillion won for the whole year.

Sales rose 23.7 percent to 65.9 trillion won in the last three months of 2017 from a year earlier, also marking a quarterly record. For all of 2017, sales came to 239.5 trillion won.

Semiconductor businesses were undoubtedly the scene-stealer, by accounting for 65.6 percent of its total operating profit in the fourth quarter at 35.2 trillion won.

Samsung Electronics attributed the strong performance to robust chip demand and increased sales of flexible organic light-emitting diode panels.

The tech giant said that the IT and Mobile Communications division in charge smartphones posted an operating profit of 11.83 trillion won in 2017, the highest since 2014.