Smartphone sales boost Samsung profits

Samsung

Samsung Electronics has reported that it has made record quarterly profits thanks, the company says, to increased sales of smartphones and other electronic components such as memory chips.

The South Korean firm said that for the quarter between April and June, it made net profits of $3.6 billion - an impressive 83 percent rise of the same period a year ago. The increase in profits meant that revenue rose by 17 percent.

However, despite the strong profits, Samsung has warned that such a level would be hard to maintain. In a statement, Robert Yi, Samsung's Head of Investor Relations said, "In the second quarter, our component business performed very strongly, yet it was a more challenging quarter for our set businesses.

"With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels."

It is thought that with the increase in smartphone usage, Samsung's profits have grown as a result. The World Cup also saw a worldwide increase in sales of flat screen TVs, items that Samsung is the world's largest manufacturer of.

In terms of mobile phones, it is the second largest manufacturer behind Nokia.

However, while the company is on a high at the moment, it is expected that a slow global economy will cause profits to fall over the next few months due to excessive supply and mass competition, especially in sales of chip and liquid crystal displays.

Higher market costs for hand-held devices and television is also expected to dampen the profit.

Beating Sony

Samsung's fortunes are monumental compared to Sony, who have struggled to make a mere $289 million profit for the quarter.

Japanese electronics companies have, in recent years, been falling behind rivals from South Korea and Taiwan in businesses like televisions and laptop computers, which were hit hard in the global economic crisis as sales evaporated and a strong yen ate into profits.

But a rebound in the global economy and solid growth in emerging markets, coupled with aggressive cost-cutting and restructurings, have started to raise their bottom lines.

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