Samsung profits fall in all key sectors

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Samsung, Asia’s most valuable technology company, on Friday reported that operating profits fell in all of its key businesses – computer chips, flat-screens and mobile phones – during the second quarter, amid intense competition and falling prices.

However, the South Korean company remained upbeat, saying most sectors had passed through their worst patch, and forecast a recovery in sales and pricing power during the rest of this year.

“During the second quarter, many companies in the same industry faced difficulties due to declining prices in mainstay products,” said Chu Woo-sik, senior vice-president at Samsung Electronics.

“We expect the second quarter to mark the trough and anticipate improvements in the second half of this year. Already, we saw market conditions for Nand flash [memory], LCDs, and handsets stabilising in the second quarter,” he said. Samsung on Friday reported operating profits of Won1,420bn ($1.5bn) in the second quarter, 12 per cent lower than in the previous three months and down 14 per cent on the previous year, but in line with analysts’ estimates.

Samsung is the world’s largest memory chip maker but operating profit in its semiconductor division declined 12 per cent quarter-on-quarter to Won980bn, largely because of declining prices of the Nand flash chips used in digital cameras and MP3 players.

However, Mr Chu said this was largely because of seasonal factors and said prices had begun to stabilise in the middle of May, with a recovery helped along by the introduction of new MP3s and handsets that required more memory.

In its liquid crystal display business, operating profits fell 31 per cent from the first quarter to Won75bn, although they were 491 per cent higher than a year earlier. Between the first and second quarters, the average selling price of Samsung’s 40-inch TV panels fell by 10 per cent to $790, while 19-inch computer monitor panel prices fell 18 per cent to $150.

But analysts said the worst was over in the flat-screen sector.

“I think prices are likely to bottom out in July or August and we are likely to see prices of monitors and notebooks picking up,” said Kim Seung-ho of Display Search.

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