Samsung profit, sales up on TV and chip demand

Second-quarter earnings shoot up 83 percent to record levels while sales rise 21 percent as the company sees surging demand for computer chips and TVs.

Samsung reported on Friday a record profit for its second quarter, triggered by a rebound in demand for computer memory chips and by rising sales for LCD TVs.

For the quarter ended June 30, the electronics company earned 4.28 trillion Korean won ($3.6 billion), an 83 percent leap from the 2.33 trillion won it earned in the prior year's second quarter. Operating profits, which are sales minus expenses, also reached record levels, rising 88 percent to hit 5.01 trillion won, while sales grew 17 percent to 37.89 trillion won.

Samsung attributed the strong results in part to a robust recovery in its semiconductor business, which contributed an operating profit of 2.94 trillion won and sales of 9.53 trillion won.

The company's memory division in particular was strong, delivering 6.71 trillion won in sales, a gain of 74 percent from a year ago. Heavy demand for DRAM chips was fueled by a rise in PC shipments and an increase in the amount of memory installed on many personal computers. In spite of a weak seasonal market, Samsung also saw robust demand for NAND chips, which are used in smartphones and tablet PCs.

Consumers continued to scoop up new TVs, driving growth in Samsung's LCD business where revenue rose 15 percent to 20 percent from a year ago. The company focused on generating sales of premium LCD screens for LED and 3D TVs and improving its manufacturing process, both part of an effort to beef up profit margins.

Samsung's digital media business, which includes its own TVs and digital devices, saw its sales rise 20 percent to 14.54 trillion won. For the quarter, the company shipped 9.02 million flat-panel TVs, a 43 percent gain from a year ago. Samsung also took an early dive into the 3D TV arena , selling more than 500,000 units since the launch of its initial lineup in March.

In the mobile phone segment, Samsung sold 63.8 million handsets for the quarter, a gain of 22 percent from a year ago. But the intense competition in the phone market forced the company to lower the average sales price of its handsets. For the third quarter, Samsung is looking to boost its market share further with its Galaxy S and Wave phones.

Despite the stellar results for the second quarter, Samsung cautioned that it may not be able to maintain that level of profitability over the near term.

"In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses," Robert Yi, Vice President and head of Samsung Electronics' 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. However, we will continue to focus on introducing differentiated products and widening our technology leadership in components to meet these difficult market conditions."

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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