Samsung expects record Q4 profits despite Note 7 setback thanks to chips

Samsung Electronics expects its highest profit in three years of 9.2 trillion won ($7.7 billion) for the fourth quarter of 2016 despite the damage from ending the Galaxy Note 7, and thanks mainly to the stellar performance of its chip business.

In its earning guidance, the South Korean tech giant said it expects 9.2 trillion won in operating profits, a jump of 49.84 percent from the previous year and 76.92 percent from the previous quarter.

It is its highest since the third quarter of 2013 when it clinched 10.1 trillion won, and is despite the recall of the Note 7 that plunged the previous quarter's profit to 5.2 trillion won.

The surprise profit is also 1 trillion won higher than Korea's market consensus of 8.2 trillion won.

For the whole year, Samsung marked 29.22 trillion won in profits, 10.64 percent higher than 2015.

The chip business is expected to have contributed the lion's share of 5 trillion won, according to analysts -- NAND flash chips have enjoyed a huge surge in demand due to spec upgrades of the fall line-up of flagship phones. The mobile business, despite the Note 7 setback, is expected to contribute 2 trillion won.

Its display business will contribute 1 trillion won, thanks to increased demand for OLED panels headed for mobile devices from Apple and Chinese buyers. Its consumer electronics business also contributed 1 trillion won due to the holiday season.

This week, Samsung announced that it will cap Galaxy Note 7's battery in South Korea to 15 percent, starting next week as the recall nears its conclusion.

The tech conglomerate has not yet commenced its reshuffle for this year due to a political scandal involving the president.