Samsung Electronics posted its strongest profit gain in years in the first quarter as sales of LCD screens and mobile phones beat expectations and its chip business didnt perform as badly as feared.
The electronics giants net profit soared 37 percent year-on-year to 2.19 trillion Korean won (US$2.2 billion) as sales rose 19 percent, to 17.11 trillion won.
The companys financial performance was especially strong considering weak prices for memory chips, its second-largest business. Sales of display screens more than made up for problems in the DRAM (dynamic RAM) and NAND Flash memory businesses, as did sales of mobile phones.
The company also reported some weakness in handset sales in developed countries, but that didnt slow down its performance.
"We saw stronger sales in emerging markets," said Woosik Chu, a vice president in investor relations at Samsung, during a conference call.
Samsungs mobile phone sales rose 33 percent year-on-year to 46.3 million units in the first quarter. Sales at its telecommunications unit grew 21 percent. The company expects to release more touch screen phones this year, as well as handsets with HSUPA (high-speed uplink packet access), said David Steel, head of the telecom unit, during the conference call.
Samsung maintained its forecast for 200 million handset sales this year, and forecast the overall handset market to grow about 10 percent this year to 1.23 billion units.
The companys LCD (liquid crystal display) screen business posted the best year-on-year sales growth of all five units, 53 percent, mainly on increased production and strong sales of TV screens, 46-inches and above, the company said.
Samsung plans to spend 3.7 trillion won on its LCD business.
The company forecast LCD sales will increase in the second quarter as TV makers prepare for the high sales season in the second half of this year.
Sales at Samsungs chip business declined 2 percent compared to the same quarter last year due to continued weak prices for DRAM and NAND products. The company expects oversupply in both segments to continue on into the second half of this year as more companies increase production at new factories or improve manufacturing technology in old plants, said Yeongho Kang, vice president of the semiconductor business.
He said the lack of a killer application in consumer electronics could delay a price recovery in the NAND market.
Despite the bad prognosis, Samsung said it will spend over 7 trillion won on new factories and equipment this year. Some analysts have forecast that memory chip makers may reduce capital spending this year due to poor market conditions.
The company said its spending is intended to solidify its market leadership and enhance future competitiveness. Samsung is the worlds largest memory chip maker.
Samsungs two smallest business units, digital media and digital appliances, both posted operating profits. Sales at the digital media unit rose 18 percent year-over-year, while the digital appliances unit increased 6 percent.
The electronics giants net profit soared 37 percent year-on-year to 2.19 trillion Korean won (US$2.2 billion) as sales rose 19 percent, to 17.11 trillion won.
The companys financial performance was especially strong considering weak prices for memory chips, its second-largest business. Sales of display screens more than made up for problems in the DRAM (dynamic RAM) and NAND Flash memory businesses, as did sales of mobile phones.
The company also reported some weakness in handset sales in developed countries, but that didnt slow down its performance.
"We saw stronger sales in emerging markets," said Woosik Chu, a vice president in investor relations at Samsung, during a conference call.
Samsungs mobile phone sales rose 33 percent year-on-year to 46.3 million units in the first quarter. Sales at its telecommunications unit grew 21 percent. The company expects to release more touch screen phones this year, as well as handsets with HSUPA (high-speed uplink packet access), said David Steel, head of the telecom unit, during the conference call.
Samsung maintained its forecast for 200 million handset sales this year, and forecast the overall handset market to grow about 10 percent this year to 1.23 billion units.
The companys LCD (liquid crystal display) screen business posted the best year-on-year sales growth of all five units, 53 percent, mainly on increased production and strong sales of TV screens, 46-inches and above, the company said.
Samsung plans to spend 3.7 trillion won on its LCD business.
The company forecast LCD sales will increase in the second quarter as TV makers prepare for the high sales season in the second half of this year.
Sales at Samsungs chip business declined 2 percent compared to the same quarter last year due to continued weak prices for DRAM and NAND products. The company expects oversupply in both segments to continue on into the second half of this year as more companies increase production at new factories or improve manufacturing technology in old plants, said Yeongho Kang, vice president of the semiconductor business.
He said the lack of a killer application in consumer electronics could delay a price recovery in the NAND market.
Despite the bad prognosis, Samsung said it will spend over 7 trillion won on new factories and equipment this year. Some analysts have forecast that memory chip makers may reduce capital spending this year due to poor market conditions.
The company said its spending is intended to solidify its market leadership and enhance future competitiveness. Samsung is the worlds largest memory chip maker.
Samsungs two smallest business units, digital media and digital appliances, both posted operating profits. Sales at the digital media unit rose 18 percent year-over-year, while the digital appliances unit increased 6 percent.
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