Samsung 3rd quarter profits rise 26%

Samsung 3rd quarter profits in 2013 rose 26% to 8.24 trillion won ($7.6bn), compared to 6.56tn won during the second quarter.

The rise was mainly driven by a revival in its memory chip business and robust smartphone sales.

In an upbeat tone, Samsung Electronics Co. says it expects smartphone sales to carry on growing over the medium term, especially with the approach of year-end promotions over the holiday seasons combined with an improved range of mass-market devices.

Some analysts, however, wonder whether the latest Samsung 3rd quarter profits may be approaching a ceiling.

Samsung 3rd quarter profits – sixth record in last seven

Over the last seven quarters, six have posted record profits, the company informed.

The company’s smartphone division is grabbing markets around the world and in virtually all price brackets.

This access to a much broader range of the socioeconomic spectrum gives Samsung a powerful competitive advantage over its main rival, Apple, which focuses on top-end phones.

This example of democratic capitalism – a term used by Margaret Thatcher when describing the Ford motor company’s initial decades – has helped turn Samsung into the worlds largest smartphone maker and seller.

Is Samsung about to hit a ceiling?

The BBC quotes Kim Sung-soo, a fund manager at LS Asset Management, who said:

“Samsung has done well, having rapidly caught up with Apple in the smartphone market. But I’m concerned whether Samsung would be able to do better. Like Nokia, Samsung may hit a limit in increasing market share. Apple is also fighting back, signaling an uphill battle for Samsung.”

However, Samsung has been forging ahead with innovative products. At the beginning of October it launched a product to rival LG with its curved display screen smartphone.

A month earlier the SmartWatch (Galaxy Gear) was unveiled which can run apps, voice calls, show alerts and has a 1.63-inch color touchscreen and a built-in camera.

However, received leaked news that the return rate of Samsung’s Galaxy Gear smartwatch reached 30% at Best Buy outlets in the U.S. “Samsung has found that more than 30% of Galaxy Gear purchases are returned in Best Buy locations, and they have asked that Samsung employees on site help try to figure out why this is.”

Samsung’s semiconductor business picks up

The company’s semiconductor business profits hit a three-year high in Q3 2013 (2.1 trillion won), which helped Samsung 3rd quarter profits for 2013 hit another record.

Semiconductor (chip) revenues increased to 9.74tn won, a 12% rise compared to Q2 2013.

A fire at SK Hynix resulted in a rise in chip prices, which in turn helped Samsung’s revenues. SK Hynix, a South Korean company like Samsung, is the world’s second largest memory chip maker (after Samsung), it is the sixth largest semiconductor company globally.

Samsung not only makes memory chips for its own devices, but also for other smartphone manufacturers, including its main rival Apple.

Other non-smartphone or tablet devices sold by Samsung did not do so well. TV sales fell after a fall in demand in Europe and China.

Smartphone and tablet market dominating consumer electronics market – this trend, i.e. smartphones and tablets dominating the market – was reported by Market Business News yesterday. Soon smartphone and tablet factory revenue throughout the market in all companies globally will be greater than all other electronic consumer products combined.