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7/30/2010
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Samsung's Record Profits Driven By Chips, LCD

Mobile phone sales were up 22% in the second quarter, but average unit price declined as did operating profit from Samsung's telecommunications unit.

Samsung Electronics reported record second quarter profits contributed primarily from its components units, but there were operating profit declines in its telecommunications operation, which includes mobile phones.

The company said it will continue basing advanced phones on Google's Android platform even as it reported that it sold 63.8 million mobile phones during the quarter -- enough to solidify its number two mobile phone market share position at 20%. Nokia still dominates mobile phone market share rankings with 35%, but it has been slipping and its smartphone portfolio has been weak.

Samsung said its mobile phone unit sales were up 22% over the previous year's second quarter, but because of intensifying competition average sale prices were down slightly.

Robert Yi, Samsung's investor relations chief, said competition hurt its mobile phone and other media units. "With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels," he said, according to media reports from South Korea.

While the company is basing its new generation of smartphones on the Android platform, Samsung is also betting on its homegrown Bada mobile operating system, which is an open source product.

Samsung introduced its Galaxy S premium smartphone in South Korea in June and more than 500,000 have been sold to date, the company said. The company is positioning the Galaxy to sell against the iPhone.

The company also pointed to several pioneering products developed in its telecommunications segments. Its SCH-r900 LTE phone is currently slated to be the first LTE phone likely to hit the U.S. market. Prepaid provider MetroPCS has said it plans to offer the phone on its LTE network.

Samsung's operating profit reached $4.22 billion for the quarter on revenue gains of 17%. The company's surging profits primarily came from its memory chips and LCD operations.

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