World’s top maker of smartphones ... no, it’s not Apple

Tech giant solidifying dominance in sector as some rivals struggle

Samsung Electronics reports a record quarterly profit, aided by one-off gains and its best-ever sales of high-end mobile phones,

SEOUL // Samsung Electronics, the world’s top maker of memory chips and smartphones, yesterday reported a record quarterly profit, aided by one-off gains and best-ever sales of high-end phones. The South Korean company, which passed Apple as the world’s top maker of smartphones in the third quarter, is quickly building on its supremacy with sleek designs and a rich product line- up, while the latest models from the likes of HTC, Nokia and the Black- Berry maker Research In Motion are struggling. Samsung is also weathering a squeeze on its bread- and- butter memory chip business with new revenue sources such as mobile processing chips and high- end OLED displays. Key rivals are increasingly turning to Samsung for components to power their tablets and smartphones.

The South Korean firm posted 5.2 trillion won ( Dh16.55 billion) of quarterly operating profit, beating a consensus forecast of 4.7tn won by analysts surveyed by Thomson Reuters. It said actual profit may rise or fall by 200bn won from the preliminary figure when the firm provides detailed earnings this month.

The result would top Samsung’s previous record profit of 5tn won earned in the second quarter of 2010 and is up 22 per cent from the preceding quarter.

One- off gains expected in the fourth quarter include about 500bn won from the sale of its hard-drive business to Seagate Technology, and reduced mobile provisions involving royalty payments, analysts said.

“Samsung has traditionally seen its first-quarter profit drop from the fourth quarter, but profit will hold up well, reaching between 4.5tn won and 5tn won, with smartphone sales expected to rise further,” said Song Jong-ho, an analyst at Daewoo Securities. Samsung entered the smartphone market in earnest only in 2010, but handsets are now its biggest revenue generator. Sales have skyrocketed thanks to a production system that rapidly brings new products to market and has mitigated weakness in its component business of mainly memory chips and flat screens.

Taiwan’s HTC, which shocked the market with revenue warnings in recent months, yesterday reported a worse-than-expected quarterly profit drop, its first retreat in two years, as models from the world’s number four smartphone maker faced competition from Apple’s iphone and Samsung’s Galaxy range. Samsung shares closed down 1.4 per cent after charging to a record 1.11 million won this week in anticipation of an upbeat forecast. The company is Asia’s most valuable technology firm, with a market value of about US$ 150bn (Dh550.98bn).