SEOUL, South Korea -- Samsung plans to plow a record pile of cash into its semiconductor and display-panel businesses, hoping to reduce reliance on sales of high-end Galaxy smartphones that are poised to peak after two years of blistering growth.
Samsung Electronics Co., the world's largest smartphone maker, reported record profit for a sixth-straight quarter on Friday. But the result still disappointed investors who expected Samsung to book even higher earnings after the Galaxy S4, its latest iteration of the flagship smartphone, was launched in April. The handset scored 10 million sales in the month after its launch.
Samsung's division that makes and sells handsets, smartphones and tablet computers has been the force behind the South Korea company's run of bumper profits, with Galaxy smartphone shipments jumping every quarter. In the three months ended June 30, the division contributed two-thirds of the company's entire operating profit.
Samsung, which does not disclose its smartphone sales figures, is estimated by research firm IDC to have shipped 72.4 million smartphones in the April-June quarter, compared with Apple's 31.2 million iPhone sales. Samsung's second quarter smartphone sales were double what it sold in the final quarter of 2011, an indication of how fast the company outpaced rivals.
But investors who once cheered the explosive sales growth now fret consumer appetite for top-of-the-range smartphones is close to being sated. Cutting-edge features have lost some of their lustre as there is now a wide choice of new devices with equivalently fast processors, powerful cameras and crisp roomy displays.
Emerging markets remain a source of growth but the middle classes in such countries flock to cheaper smartphones that are less profitable for manufacturers such as Samsung and Apple Inc. They also face additional competition from Chinese companies that specialize in affordable handsets.
-- The Associated Press