Samsung extends recovery momentum

Visitors walk by the logo of Samsung Electronics Co. at its showroom in Seoul, Wednesday. / AP-Yonhap

Handsets, semiconductors post stronger-than-expected results

By Kim Yoo-chul

Samsung Electronics posted 5.98 trillion won in operating profit in the first quarter, up 13 percent from the previous three months, extending its earnings recovery.

Nevertheless, it marks a 29.56 percent drop from a year earlier. Sales on a consolidated basis came in at 47.12 trillion won, down 12.2 percent from a year earlier.

The memory chip segment led the company’s stronger-than-expected results, with smartphones also making a greater contribution to its operating profit, company officials and analysts said.

Its memory business reported 2.93 trillion won in operating profit, and its mobile segment posted a 2.74 trillion won operating profit. The results of the two key segments were stronger than the market consensus.

Samsung expects to maintain its earnings recovery momentum in the coming quarters, boosted by growing demand for its flagship smartphones, the Galaxy S6 and S6 Edge.

At the same time, it said semiconductors and displays will further bolster its bottom line.

“Samsung invested 10 trillion won in semiconductors last year. But we plan to invest more this year to further strengthen our competitiveness in the industry,” Robert Yi, head of the firm's investor relations, said during a conference call with investors and analysts.

Baek Ji-ho, a senior executive at the company's memory chip division, said it will focus on improving yields of its 20-nanometer DRAM chips to be used in high-end smartphones.

Baek said its V-NAND technology will be used in solid state drives (SSDs) for corporate servers and PCs from the latter half as the Samsung patented V-NAND technology passed qualification tests by its major clients.

Hong Kyu-shik, an executive at the company's logic chip business division, also expressed his optimism that his division has also been on the uptrend driven by improved production efficiency, better pricing and sales of more high value products using a finer 14-nanometer FinFET technology.

Samsung's memory business, which primarily produces NAND and DRAM chips, accounts for about 75 percent of the firm's semiconductor annual sales.

In displays, Lee Chang-hoon, an executive at Samsung Display, said it is considering investing in 10th-generation liquid crystal display (LCD) lines as Samsung is pushing for the sale of ultra high-definition (UHD) TVS with large-sized screens.

Lee confirmed that Samsung has no imminent plans to produce OLED TVs as the company still believes OLED TVs are pricey. “OLED TVs are not in sight for the time being.”

Samsung was positive about the outlook for the new Galaxy series.

Park Jin-young, an executive at the company's handset division, said that division is recovering thanks to increased sales of both premium and budget devices.

“Samsung sold 99 million handsets in the first quarter. The average selling price was $200 per unit,” Park said.

The executive said the current supply shortage of the S6 Edge will be addressed during the second quarter.

Its first mobile payment system ― Samsung Pay ― will be available in Korea and the United States during the latter half of the year, he said.

He said Samsung will expand its budget mobile lineup led by devices with the Galaxy A brand in emerging markets.