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$1bn INVESTMENT PLANNED

Samsung Q2 profit surges 47.5pc to top $8.5bn

Seoul, July 27, 2013

Samsung Electronics has reported a 47.5 per cent rise in April-June operating profit of a record 9.53 trillion won ($8.54 billion), even as profits at its mobile division slipped 3.5 per cent from the previous quarter.

The high-end smartphone market, which Samsung dominates along with Apple, is slowing and the South Korean giant is struggling to convince investors it can crack the rapidly growing low-end segment, where its rivals include China's Huawei and ZTE.

Samsung also announced a $1 billion increase in investment yesterday, hoping a strong recovery in semiconductors will make up for weakening smartphone growth as it faces mounting pressure to produce eye-catching new gadgets.

Executives offered little to give investors hope that a new market-shifting breakthrough in high-end smartphone technology is around the corner, fuelling uncertainty over a segment which appears to have peaked in the first quarter after driving a series of record profits for Samsung in recent years.

Mobile division profit was still up 52 per cent from a year ago but even that fell short of expectations, as slower sales of old models like the S3 and the marketing bill for the S4 took their toll.

"It is clear that the global smartphone market is stalling because of the slowing growth of high-end smartphones and rising competition from lower-priced smartphones," said Ahn Young-hoe, a fund manager at KTB Asset Management, which owns Samsung shares.

"There is no major momentum for Samsung. The key is whether Samsung, which sources smartphone parts in-house unlike Apple, will be able to cut parts costs and increase volume and market share to offset reduced smartphone margins."

Samsung warned that global smartphone sales growth could weaken further in the third quarter, and said it expected stiffer competition due to new product launches. The world's biggest maker of memory chips and televisions said profits from its chip business rose 71 per cent to 1.76 trillion won in the second quarter. – Reuters




Tags: Samsung | Mobile | profits | Smartphone | semiconductors |

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