Samsung profits rise 81% boosted by smartphone sales

Samsung Electronics has reported its highest quarterly profit since 2008, boosted by smartphone sales and increased profitability at its display panel unit.

Net profit was 5.05tn won ($4.5bn; £2.8bn) in the quarter ending 31 March, up 81% from 2.78tn won last year.

The success of its Galaxy range had seen Samsung become the world's biggest-selling mobile phone maker.
Samsung is also the world's biggest TV and flat screen maker.
"We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced," said Robert Yi, head of investor relations at Samsung.

Bright future The firm said its IT and mobile communications division, which manufactures the smartphones, made an operating profit of 4.27tn won during the period, as revenues in the division surged 86% from a year earlier.
Samsung will unveil the latest version of its Galaxy range of phones on 3 May.

"The smartphone market has almost only two players, Samsung and Apple," said Lee Sei-Cheol of Meritz Securities.
"Since its Galaxy3 phone is being unveiled in May, Samsung will keep enjoying sales growth in its mobile phone division."
In a separate report published on Friday, Strategy Analytics said that Samsung had become the world's top mobile phone seller by volume in the first quarter, with a global market share of 25%.

 Profit call
Global demand for smartphones is expected to increase further in coming years, with research firm IDC forecasting that global smartphone shipments will rise by a third to 659.8 million units in 2012.

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Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5”

Brian Park Tong Yang Securities

Analysts said that given its robust growth and dominance in the sector, Samsung was well placed to benefit from this growth and boost its market share.

However, given the robust growth in the sector, other smartphone makers are also keen to introduce new products and tap into the fast-growing market.

Samsung is facing stiff competition from rivals such as US-based Apple, Finland's Nokia, and Taiwan's HTC.
Apple, which said earlier this week that it sold 35 million of its iPhones in the first quarter, is expected to launch a new version of its handset later this year.
Analysts said that as more models are launched, manufacturers may have to the cut price of their handsets in a bid to attract consumers, a move that may see profit margins shrink.

"Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5," said Brian Park of Tong Yang Securities.
Chip troubles Another area of concern for Samsung is likely to be its chip manufacturing unit, which has been hurt by slowing global demand for personal computers.

The success of Galaxy range of handsets has helped Samsung offset falls in other units

The firm is one of the world's biggest makers of dynamic random-access memory (DRAM) chips, which are widely used in personal computers.

However, demand for these chips has been declining as consumers turn to tablet PCs, which mostly use flash memory chips.
At the same time, falling prices have also hurt profitability in the sector.
Samsung's memory-chip division saw its profits slide by 54% during the first quarter when compared with the same period a year earlier.

The company said it expected the demand for DRAM chips to rebound in the coming months, but warned that growing competition in the sector "will lead to a price decline".