Samsung Electronics has posted a 26% jump in profits for the three month period ending in September 2013, mainly due to strong smartphone sales and better memory chip revenues. Net income for the quarter was 8.24 trillion won ($7.6bn) up from 6.56tn won during the same period last year. Samsung faces stiff competition at the high end of the smartphone market, most notably from Apple, however sales of cheaper smartphones in emerging markets such as China and South America helped Samsung increases it profits across it whole range.
While other companies like HTC are struggling to make a profit, Samsung has managed to beat expectations and make record profits in six of the past seven quarters. Samsung’s smartphone division is credited with being a key factor in these consistent earnings. Overall Samsung’s mobile unit is responsible for about two-thirds of Samsung’s earnings. Samsung is also expected to do well in the last quarter which includes the holiday period.
“It vacuumed up most of the lower-end market share, which most of the second-tier players were fighting for,” said Park Kang Ho, a Seoul-based analyst at Daishin Securities Co.
However the smartphone market is very fickle and you only need to launch a couple of bad handsets or stumble with innovation and the picture could well change. Recent history has shown that companies like Palm, Blackberry and Nokia, who all held dominant positions, fell when they didn’t keep up with consumers expectations.
However, Samsung for its part seems not to have lost its edge and recently the company released a curved screen phone, the Galaxy Round, as a teaser of what is to come from new technologies like flexible displays.
Samsung’s results were also bolstered by its semiconductor business, which reported profits of 2.1tn won ($1.9bn), the highest in three years. This was due in part to a global supply shortage sparked by a fire at one of SK Hynix Inc.’s Chinese factories. As well as making its own smartphones Samsung also supplies a lot of the chips and memory for other smartphone makers including Apple. Apple and Samsung have a bitter-sweet relationship being simultaneously rivals and partners, however Apple is keen to remove as much of its business as it can from Samsung, but at the moment Samsung supplys Apple with many of its key components including the new 64-bit A7 processor.
The only area where Samsung saw a decline was in consumer electronics, which includes televisions, due to a drop in demand in China and Europe.