Samsung Electronics books record Q2 profit on chips boom
Samsung Electronics, the world's largest maker of memory chips and flat-screen televisions, reported record second-quarter profits today as revived global demand pushed up memory chip prices.Updated: Jul 30, 2010 10:58 IST
Samsung Electronics, the world's largest maker of memory chips and flat-screen televisions, reported record second-quarter profits on Friday as revived global demand pushed up memory chip prices.
South Korea's largest firm said net profit in April-June was at an all-time high of 4.28 trillion won (3.6 billion dollars), an 83 percent rise from a year earlier.
Operating profit of 5.01 trillion won was also a record and up 88 percent from the second quarter of 2009. Revenue rose 17 percent to 37.89 trillion won.
The record profit was fuelled by renewed worldwide demand for personal computers and smartphones, which pushed up prices of key components like memory chips and liquid crystal display (LCD) panels.
Samsung's semiconductor business achieved 2.94 trillion won in operating profit in the second quarter, some 60 percent of the total, with a profit margin of 31 percent.
The figure was almost eight times the 340 billion won operating profit posted a year earlier.
Its LCD business recorded an operating profit of 880 billion won, a profit margin of 11.3 percent.
Samsung Electronics, the world's second-largest mobile phone maker after Finland's Nokia, earned 630 billion won from mobile handsets and network business.
The profit margin was a lower-than-expected 7.2 percent due to falling prices for regular mobile phones and promotional costs for new smartphone models.
The company launched its Android-powered Galaxy S smartphone in late June to try to fend off growing competition from Apple's iPhone series.
"In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses," Robert Yi, head of Samsung's investor relations team, said in a statement.
"With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels."
Yi said the company would stay focused on "introducing differentiated products and widening our technology leadership in components" to meet the difficult market conditions.
The company said strong seasonal demand for core components would drive its performance in the third quarter, although increased market supply was also expected.
It forecast that continued price competition in set businesses would push down third-quarter profit margins.
"Although most DRAM (chip) makers expect only mild price declines (sequentially) for the third quarter, there are concerns in the market about the potential for severe price erosion in the fourth quarter," Jae H. Lee, an analyst at Daiwa Securities, wrote in a report quoted by Yonhap news agency.
The company's figures are consolidated, covering its global business. It employs around 188,000 people across 65 countries.
First Published: Jul 30, 2010 10:55 IST