Samsung overtakes Nokia in mobile phone shipments

Lucy Williamson reports from Seoul on Samsung's success

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Samsung Electronics has overtaken Nokia to become the world's largest maker of mobile phones, according to research firm Strategy Analytics.

Nokia took the top spot in 1998 from Motorola, but in the first quarter of 2012 Samsung shipped 93m phones compared to almost 83m by Nokia.

Samsung also reported its highest quarterly profit since 2008.

Net profit was 5.05tn won ($4.5bn; £2.8bn) in the quarter ending 31 March, up 81% from 2.78tn won last year.

Samsung is also the world's biggest TV and flat screen maker.

"We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced," said Robert Yi, head of investor relations at Samsung.

Bright future

The firm said its IT and mobile communications division, which manufactures the smartphones, made an operating profit of 4.27tn won during the period, as revenues in the division surged 86% from a year earlier.

Samsung will unveil the latest version of its Galaxy range of phones on 3 May.

The Galaxy range has been very popular and helped Samsung overtake Apple to become the world's biggest seller of smartphones.

"The smartphone market has almost only two players, Samsung and Apple," said Lee Sei-Cheol of Meritz Securities.

"Since its Galaxy3 phone is being unveiled in May, Samsung will keep enjoying sales growth in its mobile phone division."

Global mobile handset shipments (Q1)

Company Units (millions) Market share

Source: Strategy Analytics

Samsung

93.5

25.4%

Nokia

82.7

22.5%

Apple

35.1

9.5%

Other

156.7

42.6%

Profit call

Global demand for smartphones is expected to increase further in coming years, with research firm IDC forecasting that global smart phone shipments will rise by a third to 659.8 million units in 2012.

Start Quote

Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5”

End Quote Brian Park Tong Yang Securities

Analysts said that given its robust growth and dominance in the sector, Samsung was well placed to benefit from this growth and boost its market share.

However, given the robust growth in the sector, other smartphone makers are also keen to introduce new products and tap into the fast-growing market.

Samsung is facing stiff competition from rivals such as US-based Apple, Finland's Nokia, and Taiwan's HTC.

Apple, which said earlier this week that it sold 35 million of its iPhones in the first quarter, is expected to launch a new version of its handset later this year.

Analysts said that as more models are launched, manufacturers may have to the cut price of their handsets in a bid to attract consumers, a move that may see profit margins shrink.

"Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5," said Brian Park of Tong Yang Securities.

Chip troubles

Another area of concern for Samsung is likely to be its chip manufacturing unit, which has been hurt by slowing global demand for personal computers.

Models showing Samsung Galaxy phones The success of Galaxy range of handsets has helped Samsung offset falls in other units

The firm is one of the world's biggest makers of dynamic random-access memory (DRAM) chips, which are widely used in personal computers.

However, demand for these chips has been declining as consumers turn to tablet PCs, which mostly use flash memory chips.

At the same time, falling prices have also hurt profitability in the sector.

Samsung's memory-chip division saw its profits slide by 54% during the first quarter when compared with the same period a year earlier.

The company said it expected the demand for DRAM chips to rebound in the coming months, but warned that growing competition in the sector "will lead to a price decline".

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