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December 6, 2016

why samsung share price is trading at historic highs,in spite of its recall of 2.5million galaxy 7 smartphones

"mobile phones as a percentage  of Samsung's total product portfolio"

Samsung's Mobile Phone Business as a part of its entire product Portfolio



Compounded by exploding Samsung galaxy 7 phones,Samsung smartphones are making up lesser number of devices among its entire portfolio.Post recall of Samsung's 2.5 million Galaxy 7 phones has not done much to dent the Samsung success story. Samsung Electronics’ share price, but since then the stock has recovered, and is now trading at its historic high of 17,48,000.00 KRW .So what explains this amazing come back by Samsung and its resilient share price ?A recent report suggests that initial drop in revenue of about $1.5 billion from lost smartphone sales. But it still expects the company to bring in about $103 billion in smartphone sales in 2016, which means that Samsung as a company will have a minimum impact due to the recall of Samsung galaxy 7. This is because as a company smartphones are  just one way Samsung Electronics makes money. The listed company, which is part of the larger Samsung Group, consists of four main divisions:

1)IT and Mobile Communications, which includes mobile devices, desktops, laptops, digital cameras, and network equipment
2) Display, which makes screens for mobile devices, computers, and televisions sold by Samsung and other manufacturers 
3)Semiconductors 
4)Consumer electronics, which makes appliances like refrigerators washing machines,TV's
Selling Smartphones is just one of Samsung's portfolio. It acts as a OEM to many mobile manufacturers ranging from iPhone to Huawaei to Google and many other Mobile handset manufactures to whom it provides, mobile displays,

Samsung  provides some of the iPhone's most important components: the flash memory that holds the phone's apps, music and operating software; the working memory, or DRAM; and the applications processor that makes the whole thing work. Together " Samsung's products" account for 26% of the component cost of an iPhone.This puts Samsung in the somewhat unusual position of supplying a significant proportion of one of its main rival's products, since Samsung also makes smartphones and tablet computers of its own. Apple is one of Samsung's largest customers, and Samsung is one of Apple's biggest suppliers.


samsung share price is trading at historic highs inspite of recall of galaxy 7"

This is actually part of Samsung's business model: acting as a supplier of components for others gives it the scale to produce its own products more cheaply.Samsung is also a market leader in OLED screens, a superior and more sophisticated screen technology than the LCD screens most phones have now.In Q2 2016, Samsung had 22% of the global market share for shipped smartphones, and it was the the world leader in mobile shipments.Even if this number continues to fall, Samsung will continue to make money by providing most of the Mobile Components supplies to other Mobile OEM's and this way could continue to compensate its smartphone losses