Samsung Galaxy S7 Sales Boost Company’s Profit Growth

Samsung Electronics has announced its earnings for the first quarter of 2016, and they're slightly better than predicted; the company made 6.68 trillion won ($5.58 billion) off 49.78 trillion won ($43.8 billion) in revenue, respective jumps of 12 percent and 6 percent on a year ago.

Samsung said the profit growth was led by the "early launch and successful sales" of the well-received Galaxy S7 and S7 Edge, as well as increased sales of OLED panels and stronger operations in the semiconductor division.

That statement reveals a potential problem for Samsung, however, in that the Galaxy S7's "early launch" played an outsized role in the profit growth; the mobile division saw a 42 percent jump in operating profit.

Last year the Galaxy S6 didn't come out until April, meaning that year-on-year comparisons are putting one quarter with a flagship handset launch up against one without.

Samsung said it expects the current momentum to continue into the second quarter, thanks to S7 sales and it mobile and chip businesses.

Samsung believes worldwide launches of the S7 phones, as well as increased shipments of Galaxy A and J smartphones, will boost sales even as the smartphone market slows because many consumers aren’t particularly captivated by new releases and don’t want to upgrade their current device until it dies.

Demand for chips is usually weak in the first quarter, but Samsung’s semiconductor business still managed respectable earnings by selling more high value-added products.

The semiconductor unit made 2.63 trillion won in operating profit this quarter on consolidated revenue of 11.15 trillion won. Sales were driven by its memory business, which accounted for 7.94 trillion in revenue.

Samsung’s display panel business did not do as well, posting an operating loss of 0.27 trillion won on revenue of 6.04 trillion won because of a “sharp decline” in LCD panel earnings, but strong sales of the Galaxy S7 was good news for OLED panels, since they are used for their displays.

The Korean tech giant said that demand for OLED panels will continue as more companies produce mid-to-low-end smartphones. Recent reports have also pegged Apple as an OLED buyer.