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Samsung’s strong sales of premium smartphones including the latest Galaxy S III boosted the record profits for the second quarter of 2012. But the competition over both high- and low-end smartphones will challenge its position in the coming quarters, analysts say.
The world’s largest mobile phone and TV maker’s operating profit shot up 79 percent to 6.7 trillion won ($5.9 billion) in the April-to-June quarter, from 3.8 trillion won a year ago. Samsung gave us a taste of its record profits earlier this month, but now we have further details with its full Q2 earnings report. Net income jumped 48 percent to 5.2 trillion won and revenues rose 21 percent to 47.6 trillion won.
Despite the weak demand for panels used in PCs and laptops, handset earnings jumped by 75 percent from a year-earlier period, thanks to stellar sales of its new flagship Galaxy S III and the 5-inch smartphone Galaxy Note, Samsung said during a conference call Friday.
Nearly 62 percent of the profits came from mobile business according to Lee Sun Tae, an analyst with NH Investment & Securities. Samsung is estimated to have shipped more than 49 million smartphones in the quarter, including 7 million Galaxy S III units (which is expected to reach 20 million in the next quarter).
The mobile business market is expected to grow around 10 percent in the third quarter and Samsung shipment will match the market trend, the company said.
“The third quarter will be comfortable for Samsung, the only risk factor is what Apple would introduce with its new iPhone in September like a revolutionary UI… nonetheless it won’t be reflected in the third quarter,” said Sungin Kim, senior analyst with Kiwoom Securities.
Competition over low-end smartphones will become intense, too, with the emerging brands such as China’s Huawei Technologies. Kim lowered the forecast of total smartphone shipments to 55 million for the third quarter due to this factor.
Panels and semiconductors for mobile devices will continue to do well, especially after the recent acquisition of CSR’s mobile business and NanoRadio, the company said.
Separate from its own smartphone design, Samsung is a key component supplier of display screens, chips and processors for Apple’s iPhone and iPad. Samsung and Apple have been battling over patents for more than a year. A court in California recently ordered preliminary injunctions against the Samsung’s Galaxy Nexus smartphone and Galaxy Tab 10.1 tablet sales in the U.S.
The next San Jose court trial between Apple and Samsung is scheduled for next Monday. So far, we know Apple is going to try and prove Samsung willingly copied its designs, while Samsung will attempt to show that Apple was actually similarly inspired by Sony’s products.
Photo: Devindra Hardawar/VentureBeat