Android tablet, smartphone boost Samsung in Q4

Samsung Electronics reported a fresh all-time sales high in the fourth quarter, boosted by two products with Google's Android mobile OS on board.

The world's largest maker of memory chips and LCD panels said sales rose 7% year on year to 41.87 trillion Korean won ($37.57 billion U.S.) in the fourth quarter, beating its previous sales record of 40.23 trillion won, from the third quarter of last year.

Despite falling prices for LCD screens and DRAM, two of Samsung's main products, the company's net profit rose 13% year on year to 3.42 trillion won.

"Overall in the fourth quarter we saw difficult business conditions caused by a slowdown in IT spending caused by the economic slowdown," said Robert Yi, vice president and head of Samsung's investor relations team, in a conference call. A number of companies have said economic uncertainty in the fourth quarter hurt their earnings.

Android, the most potent rival to Apple's iOS in smartphones and tablets, provided a needed lift to Samsung during the quarter, as the world's second-largest handset vendor moved to expand market share.

Sales of Samsung's Android-based tablet, the Galaxy Tab, hit 2 million units in the quarter, while the company's Galaxy S smartphone was a star performer, the company said.

"[Currently] the market is quite inclined to Android OS and we are reacting quite aggressively with a huge range of products from very high-end to mid-tier smartphones. We are also coming up with a more varied lineup for Android," said Lee Younghee, senior vice president of the company's mobile communications business.

Samsung sold 10 million Galaxy S smartphones last year, she said, and is readying a successor that will feature a dual-core processor and a Super AMOLED (active-matrix organic light-emitting diode) Plus display. Samsung also plans to unveil a range of devices to follow up the success of the Galaxy Tab.

Overall, Samsung sold 80.7 million mobile phones in the fourth quarter, raising its 2010 total to 280 million, up 23% over 2009.

Younghee cautioned that in the first quarter, "smartphone competition will become fiercer upon launch of new smartphones. At the same time we expect various new tablets to be launched in the market."

The company has set a goal to sell 60 million smartphones this year, twice as many as 2010, she said. Samsung sells smartphones with a range of OSes, including Windows Phone 7 and its own Bada OS.

The electronics giant saw tough times in its component businesses.

Prices for LCD screens and memory chips, both DRAM and NAND flash, fell in the fourth quarter, Samsung executives said. The price declines in DRAM and NAND will continue in the first quarter, but LCD screen prices may have reached bottom, according to Lee Jungryul, senior vice president of Samsung's LCD business. He expects LCD panel prices to start to tick up over the next few months.

Overall, Samsung expects component prices to remain weak in the first half of this year but to pick up in the second half of the year, notable words for people looking for PCs or flat-screen TVs, because weak component prices usually mean deals for end products.

Samsung is considered a technology industry bellwether because it is the world's largest producer of several products, including flat-screen TVs, DRAM, NAND flash memory chips and LCD screens. It's also the second-biggest mobile-phone vendor.

The company plans to spend 23 trillion won on new manufacturing equipment this year, up from capital spending of 21.6 trillion won last year, the company said in a statement. Samsung will invest 10.3 trillion won of the figure on semiconductors, down from 12.7 trillion won last year, and 4.1 trillion won in its LCD business, down from 4.6 trillion won last year.

Copyright © 2011 IDG Communications, Inc.

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