Samsung Electronics Co delighted the stock market when it reported first quarter results ahead of expectations with first quarter net income up 16.5% to $2.29bn on revenue 4.7% higher at $15.9bn.
However, a closer look at the figures suggest it is the worldwide craving for widescreen TVs that has boosted the South Korean-based conglomerate and margins are under pressure in its chip-making and mobile phone operations.
Semiconductor sales showed a 7% increase to $5.1bn with memory sales up 5% to $3.8bn while on the large-scale integration system side sales rose 7% to $616.5m. However, operating profits of the chip business, while showing a 30% sequential increase, were 6% below the figure last year at $1.3bn.
Samsung competes at the upper end of the mobile phone market and its average selling price of $175, compares with the $129 reported by Nokia for the previous quarter. But this brings it into competition with Nokia and a resurgent Motorola.
While it shipped 30.7 million units in the quarter, this only increased revenue by 2% to $4.7bn. while operating profit at the telecom unit was down 5% to $545.1m.