Samsung Electronics
posted its strongest profit gain in years in the first quarter as sales of LCD
screens and mobile phones beat expectations and its chip business didn't perform
as badly as feared.

The electronics giant's net profit soared 37 percent year-on-year to 2.19 trillion
Korean won (US$2.2 billion) as sales rose 19 percent, to 17.11 trillion won.

The company's financial performance was especially strong considering weak
prices for memory chips, its second-largest business. Sales of display screens
more than made up for problems in the DRAM (dynamic RAM) and NAND Flash memory
businesses, as did sales of mobile phones.

The company also reported some weakness in handset sales in developed countries,
but that didn't slow down its performance.

"We saw stronger sales in emerging markets," said Woosik Chu, a vice
president in investor relations at Samsung, during a conference call.

Samsung's mobile phone sales rose 33 percent year-on-year to 46.3 million units
in the first quarter. Sales at its telecommunications unit grew 21 percent.
The company expects to release more touch screen phones this year, as well as
handsets with HSUPA (high-speed uplink packet access), said David Steel, head
of the telecom unit, during the conference call.

Samsung maintained its forecast for 200 million handset sales this year, and
forecast the overall handset market to grow about 10 percent this year to 1.23
billion units.

The company's LCD (liquid crystal display) screen business posted the best
year-on-year sales growth of all five units, 53 percent, mainly on increased
production and strong sales of TV screens, 46-inches and above, the company
said.

Samsung plans to spend 3.7 trillion won on its LCD business.

The company forecast LCD sales will increase in the second quarter as TV makers
prepare for the high sales season in the second half of this year.

Sales at Samsung's chip business declined 2 percent compared to the same quarter
last year due to continued weak prices for DRAM and NAND products. The company
expects oversupply in both segments to continue on into the second half of this
year as more companies increase production at new factories or improve manufacturing
technology in old plants, said Yeongho Kang, vice president of the semiconductor
business.

He said the lack of a killer application in consumer electronics could delay
a price recovery in the NAND market.

Despite the bad prognosis, Samsung said it will spend over 7 trillion won on
new factories and equipment this year. Some analysts have forecast that memory
chip makers may reduce capital spending this year due to poor market conditions.

The company said its spending is intended to solidify its market leadership
and enhance future competitiveness. Samsung is the world's largest memory chip
maker.

Samsung's two smallest business units, digital media and digital appliances,
both posted operating profits. Sales at the digital media unit rose 18 percent
year-over-year, while the digital appliances unit increased 6 percent.

IDG News Service

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