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Samsung's profit surges on chip rebound, sale of cheaper phones

South Korean electronics giant posts record $9.6 billion quarterly net income on rebound in chip business and sales of cheaper handsets as smartphones sales waned.

Samsung's Galaxy S4
Samsung's Galaxy S4 didn't help the company's third-quarter earnings much. Sarah Tew/CNET

Samsung Electronics posted record quarterly earnings Thursday that were largely powered by a rebound in its semiconductor business that offset softening demand in the smartphone market.

The South Korean electronics giant posted an operating profit of 10.2 trillion won ($9.6 billion) for the three-month period ended September, a 26 percent increase over the year-ago period and a 7 percent rise from the previous quarter. The company recorded overall sales of 59.1 trillion won ($55.5 billion) for the quarter.

Its net income of 8.05 trillion won ($7.6 billion) was 25 percent higher from the 6.42 trillion won it recorded in the third quarter of 2012. The quarterly results were in line with earnings guidance the company released earlier this month.

Much of that was due to a rebound in the company's semiconductor division, which recorded an operating profit of 2.06 trillion won ($1.93 billion), more than double its 1.02 trillion won from a year-ago period. It was the best earnings performance in three years for the company's chip business, which has suffered from a global glut of chips.

Samsung's mobile division, which typically accounts for two-thirds of its revenue, posted an operating profit of 6.7 trillion won ($6.3 billion), up from 5.63 trillion won a year earlier. While demand for high-end smartphones waned in the quarter, the division's profits were buoyed by sales of cheaper handsets in emerging markets such as China, South America, and Eastern Europe.

Samsung earnings come out as its flagship Galaxy S4 reportedly hit the 40 million unit sales mark. The Galaxy S4 went on sale in April, with sales reckoned to have hit 10 million just less than four weeks later. Just over two months after that, in early July, the 20 million milestone was hit, suggesting that sales may have slowed ever so slightly during the summer, or at least leveled out. The latest milestone suggests there might still be consumer demand for the 5-inch smartphone.