Galaxy smartphones boost Samsung’s Q1 sales by 25% to $50 billion

Telecom Lead Asia: Galaxy smartphones boosted Samsung Electronics’ first-quarter sales by 25 percent to 52 trillion won ($50 billion) from 45.27 trillion won ($40 billion) a year earlier.

Sales of cheaper Galaxy handsets in emerging markets have boosted its revenue and profit.

Samsung, which is beefing up security due to the tension between North Korea and South Korea, said its operating profit rose to about 8.7 trillion won ($7.7 billion) from 5.69 trillion won a year earlier.

But smartphone OEMs are under threat, said IHS.

Outsourced manufacturers that previously were making strong gains in the cellphone market now face a diminished growth outlook, as mobile communications brands increasingly opt to manufacture smartphones on their own, according to an IHS iSuppli Global OEM Manufacturing & Design Market Tracker Report from information and analytics provider IHS.

Cellphone original equipment manufacturers (OEM) that have their own manufacturing facilities—a group that includes Samsung Electronics, LG Electronics and Nokia—accounted for 73.4 percent of all cellphones manufactured in 2012. Meanwhile, the two major types of outsourced manufacturers—electronics manufacturing services (EMS) providers and original design manufacturers (ODMs) accounted for the remaining 26.6 percent of production.

“Cellphone OEMs have been scaling back their use of outsourced manufacturers as they realign their product portfolios toward smartphones,” said Jeffrey Wu, senior analyst for outsourced manufacturing at IHS. “OEMs like Nokia, LG, Sony and Motorola all have trimmed their use of outsourced manufacturers to ensure that internal facilities are being fully utilized and not being idled, and also to safeguard the quality of the smartphones being produced.”.

Despite court cases, Samsung is expanding its presence in the U.S. On March 14, Samsung unveiled its Galaxy S4 with a bigger screen and improved software functions in New York as it tries to reclaim the top spot in mobile-phone sales in the U.S., where it was overtaken by iPhone maker Apple in the three months ended December 31, 2012.

In addition to the Galaxy S3, mini models sold well in emerging markets including China, Brazil and India.

The company’s mobile division, which accounted for 67 percent of total operating profit last year, probably had a first-quarter operating profit of 6.25 trillion won as sales increased 40 percent, according to a Bloomberg News survey of five analysts.

Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities, estimated Samsung’s first- quarter smartphone shipments at 70 million units, compared with 62 million in the preceding quarter.

Apple, major rival to Samsung, sold 47.8 million units in the quarter ended December 31, it said in January.

Samsung plans to release three high-end smartphones in 2013, including the S4, a new version of the Galaxy Note and a device using the Intel Corp. (INTC)-backed Tizen operating system. The handset market grew almost 12 percent last year to $358 billion in sales, according to IDC.

For the second quarter, Samsung’s operating profit will probably exceed 10 trillion won, largely driven by Galaxy S4 sales, Lee Seung Woo, an analyst at IBK Securities, said in a March 26 report.

Shipments of flagship models including the S4 may total 37.8 million units in the second quarter, while the average selling price may rise 17 percent, bringing operating profit at the mobile business to about 7.9 trillion won, according to Lee.

Samsung’s total smartphone shipments may grow to 82 million units in the second quarter from 68.5 million in the first quarter, he said in the report.

Operating profit at Samsung’s chip business probably rose to 1 trillion won in the first quarter from 700 billion won a year earlier, according to the survey of five analysts by Bloomberg News.


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