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Samsung misses tripling profits by a hair
But squeezed margins could scupper storming sales

By Kelly Arnold

Published: Monday 19 July 2004

Samsung Electronics has almost tripled profits in its second quarter, boosted by sales of memory chips and flat screens.

The world's second-largest semiconductor-maker and third-largest mobile phone manufacturer's net profit is £1.43bn for the quarter ending 30 June, up from £520m the previous year but down from £1.44bn in the first quarter.

The company's semiconductor business reported its highest revenue, with a rise of 21 per cent in its operating profits despite a decrease in flash-memory prices and a traditionally slow second quarter.

Samsung's LCD business saw a 25 per cent rise in sales compared to last quarter, despite concerns about potential oversupply.

Sales of mobile phones reached a record 22.7 million handsets, up from 20.1 million in the first quarter. The South Korean conglomerate is now raising its earlier forecast of selling 65 million units this year to 86 million, in anticipation of the launch of new models in the third quarter.

Despite sales success, handset profit margins have dropped from 26 per cent to 16 per cent due to tough competition in the US market, potentially halting Samsung's growth as the year progresses. As a result, the company is adopting a more cautious outlook for the second half of the year.