Samsung reports 40% jump in handset shipments

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Samsung reports 40% jump in handset shipments

Memory revival main contributor to record profit in first quarter

By CAROLINE GABRIEL

Published: 30 April, 2010

READ MORE: Financial | Samsung | Semiconductor | Handset

Samsung reported a 40% year-on-year rise in handset shipments in its first quarter, contributing to a 21% increase in group revenue to KRW34.6 trillion ($31.2bn), and record operating profit of KRW4.41 trillion ($4bn). This was up 643% on the year-ago quarter and topped a previous high of KRW4.22 trillion, set in Q309. Net profit was KRW3.99 trillion ($3.6bn).

The star contributor to these strong results was the semiconductor business, which made operating profit of $1.8bn, reversing a loss a year ago as revenue leapt by 57% to $7.4bn. This was largely because of the recovery of volumes and prices in the memory markets, and the introduction of new technologies. Strong demand for smartphones and other mobile devices was the key driver behind the memory revival, said the firm.

In handsets, Samsung did better than Nokia and LG in escaping the effects of price depression, even though it is equally exposed to low margin emerging economies. Its average selling price (ASP) actually increased slightly, mainly because Samsung had reduced costs in some areas, particularly marketing.

Its handset shipments were up 40% year-on-year to 64m units, almost 60% of Nokia's total of 107.8m units. This shows how Samsung is increasingly moving into the market leader's ballpark in volume terms - in just a few years it has moved from fourth to second place in the global ranking and the big two are putting wider clear water between themselves and other challengers - apart from LG, no other vendor routinely gets over 10% share.

Samsung's handsets did experience a seasonal dip, down 7% from the holiday quarter in Q409. In revenue terms, the mobile division was up 8% on the year-ago period to make KRW8.57 trillion ($7.68bn), but down 8% on the previous quarter.

Samsung said the strongest elements in its cellphone performance were increased share in mass market devices, the global expansion of the cellphone industry (since it sells into virtually every country), and good performance with the Chinese 3G carriers. However, it knows it still needs to rebalance its range and revenues towards the higher margin areas, and is promising a wide range of smartphones and mediaphones this year, running Android, Symbian, LiMO, Windows and its own bada platform.

In a statement, Robert Yi, Samsung's head of investor relations, said he was cautiously optimistic that Q2 earnings would improve continued strength in memory chip markets, good LCD panel demand, and increased sales of handsets and TVs.