Business UK

Samsung: Why is it doing so properly regardless of Galaxy Be aware 7 fiasco?


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Samsung Electronics noticed earnings surge 50% within the final three months of 2016, regardless of the Be aware 7 telephone fiasco.

The 9.2 trillion received ($7.2bn; £5.8bn) quarterly revenue is the South Korean agency’s highest since 2013.

In October, the smartphone maker needed to scrap the Be aware 7, after recalling 2.5 million handsets. Batteries were blamed for phones catching fire.

Samsung has additionally been embroiled in a corruption scandal, threatening its popularity, so how has it performed so properly?

It is not nearly telephones

Recalling after which finally killing off the Be aware 7, is believed to have value Samsung $5.3bn (£four.3bn), a sum that will have made the agency’s earnings far larger.

However whereas it’s the world’s largest smartphone maker, telephones aren’t its solely enterprise. It is usually well-known for its flat display televisions and that facet of issues is doing properly.

However the true jewel within the crown has been its semiconductor enterprise which makes the chips for telephones and servers.

Reminiscence chip costs are rising sharply as demand grows, primarily from telephone makers and Samsung is the most important maker of the chips, forward of rivals like Toshiba.

Clients appear unfazed

Regardless of the YouTube movies of burning telephones, the drip-drip of adverse tales and the web memes, Samsung doesn’t appear to have been as tarnished anyplace close to as badly as you would possibly anticipate.

A Reuters/IPOS study within the aftermath of the scandal discovered Samsung customers within the US remained as loyal to their model as Apple customers had been to their iPhones.

As a result of the issue was recognized shortly after the Be aware 7 was launched the recall was largely restricted to early adopters, and this restricted the adverse experiences, mentioned Jan Dawson of Jackdaw Analysis.

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Brian Inexperienced

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This Samsung telephone led to a flight being evacuated – however the Samsung picture just isn’t too tarnished.

“Your individual private expertise trumps what you learn and what folks let you know,” Dawson on the time of the Reuters/Ipsos ballot.

And Samsung has mentioned that after its recall, most clients selected to switch their Be aware 7 with a unique Samsung handset – together with the Galaxy S7 and S7 Edge – somewhat than getting the cash again.

Our correspondents in South Korea say main company scandal – which led to a court being asked to issue an arrest warrant for the firm’s heir apparent over bribery allegations – didn’t appear to have tarnished the company’s popularity at house dramatically both.

Nevertheless, whereas the arrest request was turned down, Samsung stays embroiled within the case and the agency has acknowledged the “altering political panorama in Korea” might have some long run impression on the enterprise. So future outcomes shall be watched carefully.

Foreign money profit

Not a very glamorous clarification however the sturdy greenback has additionally been a profit to Samsung.

The received’s worth in opposition to the US forex has fallen, which means that when gross sales from abroad are introduced again to South Korea they’re price extra.

It is one thing all South Korean exporters have benefited from not too long ago.

In fact forex fluctuations work each methods, and the sturdy greenback implies that any dollar-denominated debt is costlier.