Samsung beats HP to pole position

South Korea’s Samsung Electronics has overtaken Hewlett-Packard as the world’s biggest technology company by sales as it forecast that higher memory chip prices would result in record operating profit in the current quarter.

Samsung, the world’s largest maker of memory chips, reported sales for the 2009 calendar year of Won136,290bn ($117.8bn), pushing it ahead of HP of the US, which had sales of $114.6bn for its financial year to the end of October.

Samsung is expected to retain top spot this year with 2010 sales forecast at $127bn, compared with $120bn from HP. Direct comparisons are obscured by the volatility of the won and the two companies’ different reporting periods.

The company, which is also the world’s largest liquid crystal display maker, said television demand would remain strong in the first half of this year, but warned that rising capacity could hurt the sector in the second half.

Samsung, which has been criticised by analysts for lacking “killer products”, plans to increase its capital spending this year. The company, which invested Won8,100bn in total last year, plans to spend more than Won5,500bn on memory chips and Won3,000bn on its LCD business in 2010.

“Overall demand would steadily increase in line with global economic recovery,” Samsung said.

The weaker won last year helped Samsung compete with its Japanese rivals, such as Sony and Sharp, in export markets. However, it may face the reverse this year as the yen gradually gets weaker while the won rebounds.

South Korean companies including Samsung and Hyundai Motor have built up market share effectively during the financial downturn. Samsung used its deep pockets to extend its technological lead over rival chipmakers in Taiwan, while Hyundai took full advantage of disarray in the US car industry to build up its global presence.

Samsung’s operating profit nearly doubled to Won10,920bn ($9.5bn) in 2009 from Won5,710bn a year before, while sales increased 15 per cent. The company swung to an operating profit of Won3,700bn in the fourth quarter after suffering an operating loss of Won740bn a year before. Fourth-quarter sales totalled Won39,240bn.

Its handset business, the second largest maker of mobile phones after Finland’s Nokia, sold 277m units last year, up 16 per cent from a year ago in global market that shrank by 10 per cent.

The company plans to strengthen its smartphone business this year by offering new models based on Google’s Android operating system. It only has a 5 per cent market share in this fast-growing subsector, behind Nokia, which reported earlier this week it had lifted its fourth quarter market share to 40 per cent, and Apple on 17 per cent.