Samsung Post Record Operating Profit on Chip Prices

It is reported that Samsung posted record earnings in the last quarter of this year (2010). This was boosted by the increase in prices for computer-memory chips that came about as result of the demand that increased again. The company has capitalized on the chip business. The operating income for the second quarter increased 87% to 5 trillion won from 2.67 trillion won in the previous year and at the same time there was 14% sales gain. However, the company is faced with the challenge of sustaining earning growth in the midst of concerns that the prices might have reached the peak and the fiscal crisis of Europe will persist.

The growth in the company’s chip business earnings is expected to extend through the third quarter of the year and this will be through the help of the increasing profit coming from the chip division. As it is reported, the better performance in the second quarter as compared to the first quarter may be attributed to the semi-conductors offsetting the poor performance in the mobile phones.

Samsung also has a target of more than doubling its share in the smart phone market and this will be aided by bringing in the market the Galaxy S model. In the current day, the company’s share in this market is only 4 percent. This new model is likely to bring down the level of skepticism of the investors in regard to the handset business of Samsung. It is projected that the company will sell over 7 million units before the end of this year and this is projected to bring in 3 billion US dollars in revenue. It is reported that Samsung overtook the world’s leading mobile phone manufacturer, Nokia Ovi, in the shipments of low-end handsets in the first quarter of this year to Western Europe (Park).


The Samsung Company has been able to put in place appropriate business strategy that has enabled it to realize an increase in revenues. The company has capitalized on the sale of computer-memory chips and these have been sold at increased prices resulting from an increase in the demand. As a business strategy, the company has engaged in investing more in plants and equipment than any other technology company in order to widen the base in chips since this company serves other large companies like Apple and Dell Inc. that are involved in computer manufacturing.This company is also targeting to more than double its share in the smart phone market and this will be aided by bringing in the market the Galaxy S model and this new model is expected to bring down the level of skepticism of the investors in regard to the handset business of Samsung.




http://www.businessweek.com/news/2010-07-06/samsung-posts-record-operating-profit-on-chip-prices.html