Samsung reports highest profit in two years on chips, LCDs

Strong sales of LCD TVs and mobile phones also helped Samsung

Samsung Electronics reported its highest quarterly net profit in over two years on Friday as its semiconductor and LCD businesses returned to profitability.

The company's second quarter was also helped by stronger sales of LCD TVs and mobile phones, and the company noted increasing sales of Mobile WiMax network equipment.

The world's largest memory chip and LCD panel maker said its net profit rose 5 percent year-on-year to 2.25 trillion Korean won (US$1.80 billion) in the second quarter, it's best showing since the fourth quarter of 2006, when its net profit was 2.37 billion won. Samsung's revenue rose 16 percent to 21.0 trillion won.

Samsung is considered a bellwether for the global technology industry due to its size and market share in important businesses, from memory chips and LCD panels to mobile phones. The strong results show demand for technology products remains resilient in the face of the global recession.

Two of Samsung's biggest businesses, semiconductors and LCD panels, both returned to profitability in the second quarter after two straight quarters of losses.

"We believe the LCD panel industry has passed the bottom and is improving as it enters the third quarter peak season," said Yeongduk Cho, vice president of Samsung's LCD business, in a conference call.

China proved a surprise for the company's LCD panels and TVs. Although some markets declined, "the Chinese economy rebounded heavily and that helped us," Cho said. Demand for TVs overall could rise to 25 million in China this year, he said, and if that happens the figure should reach 30 million next year, same as the U.S. or Europe.

Stronger than expected demand has taken LCD makers by surprise, and a shortage of glass supply will limit overall LCD panel supply growth over the next few months, Cho said.

LCD panel prices, one of the most expensive parts of laptop and desktop PCs, as well as LCD TVs, will rise in the third quarter, he said, predicting a slowdown in LCD demand could take hold in the fourth quarter if prices increase too much.

Rising DRAM prices helped Samsung return to profitability in its semiconductor division. The company noted stronger PC sales during the second quarter and said limited DRAM supply growth helped push up prices. PC shipments could rise 10 percent quarter-on-quarter in the third quarter, Samsung noted in its presentation materials.

Demand for higher end DDR3 (double data rate, third generation) DRAM chips increased for notebook PCs and servers, Samsung said. The chips offer far higher bandwidth than their predecessor, DDR2, and greater power efficiency.

NAND flash memory prices also increased as more of the chips were used in smartphones, Samsung said.

Mobile phone shipments rose 14 percent year-on-year for Samsung to 52.3 million units. Sales increased in developed and emerging markets, the company noted, saying sales of touchscreen and messaging phones remained robust in the U.S. and Europe.

The company forecast it will ship 200 million handsets this year.

Despite the upbeat report and return to profitability in its most important businesses, Samsung maintained a conservative outlook on the global economy.

"We maintain a cautious view looking ahead to the remainder of 2009 as operating profit may be affected by a possible appreciation of the Korean won and intensifying market competition," said Robert Yi, vice president and head of Samsung Electronics' investor relations team, in a statement.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags samsunglcdsemiconductor

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?