Samsung Electronics had Q2 revenues of $32bn for a net profit of $3.6bn and an operating profit of $4.2bn.
“In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses,” says Samsung vp Robert Yi, “with intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels.”
The company increased profitability in Q2 on the back of memory sales. The semiconductor business recorded an operating profit of $2.5bn on sales of $8bn, while the LCD Business generated an operating profit of $740m on sales of $6.5bn.
Samsung said H1 capex was $7.7bn, representing 51 of the total $15.3bn in capex planned for 2010.
Samsung’s semiconductor business had sales of $8bn with an operating profit of $2.5bn resenting a record profit margin of 30.8%. Operating profit was up 765% on the $286m a year ago.
The memory division continued to drive growth, accounting for $5.6bn of sales, an increase of 74% year-on-year.
Strong demand in the DRAM market was driven by a mid 20s of percent increase in PC shipments and a more than 30s of percent rise in gigabytes per system year-on-year.
In NAND, despite weak seasonality, demand remained steady due to strong sales of mobile devices including smartphones and tablet PCs. Samsung’s enhanced profitability was supported by accelerating the migration to 40nm-class process technology in the DRAM market and expanding 30nm-class process in NAND.
In the third quarter, the demand for DRAM is expected to rise due to strong seasonality, while there will also be increased demand for high-capacity NAND products.
Samsung will focus on widening its technological leadership by expanding 30nm and 40nm-class memory products and enhancing price competitiveness.
The LCD Business recorded an operating profit of $740m on revenue of $6.5bn. The operating profit margin was 11.3% compared with 4.2% the previous year.
Samsung’s LCD panel sales increased 15-20 percent year-on-year. The industry average sales price for TV panels increased three percent, while notebook PC and monitor panel pricing was flat.
Samsung focused on increasing sales of premium LCD panels for LED and 3D TVs, while enhancing its manufacturing line efficiency in order to improve profit margins.
The company expects strong seasonal demand in the third quarter, but increased supply in the market will have a balancing effect.
The telecommunication businesses – including Mobile Communications and Telecommunication Networks – posted an operating profit of $530m on revenue of $7.4bn. The operating profit margin was 7.2%.
In the Mobile Communications Business, Samsung sold 63.8m handsets during the second quarter, an increase of 22% year-on-year. However, increased market competition caused a slight decline in average sales price. Touch-screen mobile handsets made up 30% of Samsung’s unit sales during the quarter, compared with 15% a year ago.
In Q3, Samsung aims to increase its share of the growing smartphone market through flagship devices including the Galaxy S and Wave. The Android-powered Galaxy S has been selected by more than 100 carriers around the world, including four major service providers in the United States. Samsung will also launch a range of mid-end smartphones as part of its strategy to provide mobile devices for every lifestyle.
Samsung’s digital media businesses – including Visual Display and Digital Appliances – registered sales of $12bn, a 20% increase year-on-year. Operating profit was $302m, down from $975m in the same period last year.
In flat panel TVs, Samsung shipped 9m units, up 43% year-on-year due to strong growth in developing markets. In developed markets, increased sales of large-sized, LED and 3D-capable TVs drove operating profit.
Samsung sold more than 500,000 3D TVs following the launch of its new line-up in March.
Digital Appliance sales rose 23% from the same period of 2009, supported by demand in developed markets, Russia and some emerging markets.
In Q3, demand for flat panel TVs is forecast to increase 20% year-on-year. Sales of high-end LED models are expected to rise, accounting for 30% of total LCD TV sales during Q4.
Samsung will continue to expand its LED TV line-up and its 3D TVs.