Samsung profits shrink despite record revenues

Samsung has reported its earnings for the final quarter of 2017, and while profits shrunk year-on-year it does seem to be pretty good news for the Koreans.

Over the course of the quarter, operating profit fell slightly to $14.25 billion, though total revenues did increase 24% compared to the same period to roughly $62 billion. Over the course of the 12 months, revenues increased 19% to just over $224 billion, while operating profit jumped a monstrous 83% to just over $50 billion.

Looking more specifically at the individual business units, the semiconductor was attracting all the praise once again. The largest contribution came from the Memory business that manufactures DRAM and NAND, with Samsung gobbling up market share. This growth is expected to continue over the next couple of months, as new data centre builds will continue the demand for DRAM, while demand for NAND is likely to remain stable.

Interestingly enough, Samsung could now be considered the world leader in the chip market. A title long-held by Intel has now seemingly been handed over, as the $69.1 billion generated by the Samsung semiconductor business exceeds the $62.8 billion brought in by Intel over the last twelve months. Admittedly it is not a direct comparison as the pair operate in different sub-sectors, but looking at a cash basis Samsung is number one.

In the mobile business, earnings declined due to increased marketing costs prior to Christmas and lower shipments. Top-range devices maintained sales, though Samsung stopped selling as wide a range of low-range devices which has been blamed for the slowdown in total shipments. This dip might only be temporary however, as the launch of Galaxy S9 over the next coming months will provide a notable boost for the business.

This focus on the top end will only continue over the next twelve months as well. The business unit might not match total revenue numbers but the theory here seems to be focusing on profitability. In the low- and medium-range devices market the aim will be to simply hold-strong and maintain the current position, while the moves will be made further up the food chain.

Elsewhere on the mobile side of things, the Networks Business anticipates some bites when it comes to 5G commercialization in major markets including Korea, the US, and Japan. We’ve already seen a glimpse of the 5G potential in the US over the last couple of months, Samsung did win a useful contract with Verizon, but this is only the tip of the iceberg. 5G will start paying off before too long, but it can’t come soon enough as Samsung notes ‘the completion of LTE investments’.

Samsung might be known for a flashy phone with a big screen in most places worldwide, but the chip business is proving to be the saviour here. It might not be the most exciting aspect of the technology industry, but considering the anticipated need for components relating to software, connected devices, and services based on AI/IoT platforms, it might just pay-off to be boring.

Samsung fuels chip launch with AI and speed promises

Ahead of CES in Las Vegas, Samsung has launched its latest blitz on the AI processor market, unveiling the Exynos 9 Series 9810.

Built with the upcoming AI revolution in mind, Samsung has said the chip features a 2.9 GHz custom CPU, a 6CA LTE modem and deep-learning processing capabilities. Build on Samsung’s second-generation 10-nanometer FinFET process, the team will hope to continue the very healthy progress this division has been making over recent months.

“The Exynos 9 Series 9810 is our most innovative mobile processor yet, with our third-generation custom CPU, ultrafast gigabit LTE modem and deep learning-enhanced image processing,” said Ben Hur, VP of System LSI Marketing at Samsung.

“The Exynos 9810 will be a key catalyst for innovation in smart platforms such as smartphones, personal computing and automotive for the upcoming AI era.”

Looking specifically at the LTE modem, Samsung claims it will be able to support 6x carrier aggregation for download speeds of up to 1.2 Gbps, and upload speeds of 200 Mbps. Should this turn out to be accurate, this would comfortably exceed todays maximums, now we just need devices which can support them.

Now the technical bit is over, the new chip will most likely feature in the next Galaxy S flagship device, powering features such as facial recognition and object detection, both of which are fast gaining mass market acceptance.

Energy efficiency will likely be another prominent feature for the phone, a selling point which has historically been popular with the Samsung marketing team. Considering the PR headache Apple is facing with its batteries, Samsung might be able to benefit from the misery.

UK set to lose its Imagination to China-backed investors

Embedded GPU maker Imagination Technologies has accepted an acquisition bid of £550 million from Canyon Bridge, which receives its funding from China.

Imagination has been looking for a buyer all summer, having concluded this was the best option for its shareholders after its biggest customer – Apple – announced it was going to do its own GPU thing earlier in the year. Its board has accepted an offer of 182p per share – a 42% premium on the share price immediately before the announcement that values the deal at around £550 million.

Canyon Bridge Capital Partners seems to have been created in order to buy US company Lattice Semiconductor late last year, based in the US but with initial funding from Chinese investors. This provenance seems to have been the reason the Committee on Foreign Investment in the US subsequently blocked the move.

With the Lattice acquisition having been valued at $1.3 billion, the move for Imagination has the feeling of a consolation prize. “Imagination has a world-class management team and highly talented employees,” said Ray Bingham, Partner at Canyon Bridge. “With our backing and investment Imagination can continue to invest in developing its technology, attract and hire the best engineers, and acquire and service customers globally.

“This transaction is in line with Canyon Bridge’s strategy of providing equity and strategic capital to enable technology companies to reach their full growth potential by opening new markets through our collaborative investment approach. We are investing in UK talent and expertise in order to accelerate the expansion of Imagination, particularly into Asia, where its technology platform will lead the continued globalization of British-developed innovation.”

“The proposed acquisition is a very good outcome for Imagination’s shareholders which the Imagination directors are intending to recommend unanimously,” said Imagination CEO Andrew Heath. “Imagination has made excellent progress both operationally and financially over the last 18 months until Apple’s unsubstantiated assertions and the subsequent dispute forced us to change course.

“The acquisition will ensure that Imagination – with its strong growth prospects – remains an independent IP licensing business, based in the UK, but operating around the world. Imagination employs a large number of hugely talented individuals who have developed our market leading technology. They and the business as a whole will benefit from Canyon Bridge’s investment in Imagination as it moves to the next stage of its development.”

One condition of the acquisition will be the separate sale of the MIPS embedded CPU unit, which Imagination acquired back in 2012. While the UK doesn’t seem to be either as protectionist (e.g. Softbank buying ARM) or as twitchy about Chinese involvement in its tech sector as the US it will still be interesting to see if its government decides to have a look at the deal.