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Samsung sees 2016 profit jump despite Note 7 debacle

Samsung sees 2016 profit jump despite Note 7 debacle

The company sees AI as a key differentiator for its smartphones in 2017

Samsung Electronics said its profit rose almost 20 percent in 2016 despite nearly flat sales and the costly recall of the Note 7 smartphone.

The company reported an annual net profit of 22.7 trillion won (US$19.5 billion), up 19.2 percent, on sales of 201.9 trillion won (US$173.5 billion), up just 0.6 percent.

Samsung saw some of its biggest sales gains in memory chips on the back of strong demand from smartphone makers. The company is one of the world's biggest memory chip manufacturers.

The mobile division saw sales fall 3 percent in 2016 to 97.8 trillion won. It's Samsung's biggest division by sales and was hit by the recall of the Note 7 smartphone and slowing demand for high-end phones.

A day earlier, Samsung divulged that battery problems were to blame for the fires and explosions that led to the massive recall. It said batteries from two manufacturers suffered from internal problems that caused a short circuit and fire.

Looking ahead, Samsung said it expects the smartphone market to slow down while artificial intelligence services present a new business opportunity. To date, Samsung handsets have featured Google's AI personal assistant, but the company reportedly is developing its own assistant.

Samsung also signaled that it plans to boost the competitiveness of its mid-to-low-end smartphones by adding features that were previously only available in more expensive models.

In the consumer electronics business, sales barely rose but profit more than doubled to 2.6 trillion won. Samsung said it sees high-end QLED televisions and large-screen 4K televisions as key to growth in 2017. It will also attempt to expand the business-to-business side of its home appliance division.

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