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Samsung Electronics flags mobile weakness as chips power record first-quarter profit

SEOUL (Reuters) – Samsung Electronics Co Ltd ( 005930.KS ) said weakness in the global smartphone market would slow earnings growth, as it reported in servers.

FILE PHOTO: The logo of Samsung Electronics is at its office building in Seoul, South Korea, March 23, 2018. REUTERS / Kim Hong-Ji / File Photo

The world's biggest maker of memory chips, smartphones and television sets so flagged softer demand for smartphone OLED panels as a challenge for the second quarter, while its cash cow chip business should remain strong.

"Generating overall earnings growth across the company is becoming a challenge in the high-end segment," the South Korean Giant said in a statement.

Samsung Electronics shares were up 2.7 percent as of 041

2 GMT, while the KOSPI benchmark share price index .KS11 was 1.3 percent higher, as investors shrugged off concerns about the smartphone market and seized on the outlook for memory chips.

"Shares are rising as Samsung Electronics outlook for its memory chip business appears more positive than we've heard from other companies," said Greg Roh, analyst at HMC Investment & Securities.

South Korean rival SK Hynix Inc ( 000660.KS ) and Taiwan Semiconductor Manufacturing Co Ltd (TSMC) ( 2330.TW ) separately warned this month of slower growth in smartphone chip sales. TSMC, a key supplier for Apple Inc's ( AAPL.O ) iPhones, cut its revenue target last week.

The Samsung Galaxy S9 Plus is shown during the Mobile World Congress in Barcelona, ​​Spain February 27, 2018. REUTERS / Yves Herman

But Samsung Electronics, a supplier to Apple, does not support sales of server chips but mobile chips as well.

Sewon Chun, senior vice president at Samsung's memory business, said the trend toward "high-density" chips with more processing power and larger capacity would be drastic and NAND chips this year.

such as high-performance gaming, he told an earnings call.

Samsung Electronics said operating profit was 15.6 trillion won ($ 14.4 billion) in the first quarter, up 58 percent from a year ago and in line with the 15.6 trillion won the company had estimated. Revenue jumped 19.8 percent to 60.6 trillion won, so in line with its estimate.


The chip business was Samsung's top earner again as it booked a record 11.6 trillion won operating profit in January-March, from 10.9 trillion won in the previous quarter, despite the recent boom in memory chips was tapering off.

Samsung banned US further ZTE Corp. ( 000063.SZ ) ( 0763.HK ).

Qualcomm Inc ( QCOM.O ) is released out of the USA. ban.

Ben Hur, vice president of Samsung's LSI business system, said with Qualcomm, Samsung said it would "Samsung respond to Samsung's chip sales in China.

Samsung said its mobile business booked 3.8 trillion won in quarterly profit, up 82 percent from a year ago. Its flagship Galaxy S9 hit the market in mid-March.

According to market research firm GfK, global smartphone demand fell two percent to 347 million units in the first quarter of 2018. Demand was sluggish in China and North America, it said.

However, the average sales grew 21 percent year-on-year in the quarter, leading to an 18 percent rise in global smartphone revenue to $ 129.8 billion.

($ 1 = 1,081,2000 won)

Reporting by Joyce Lee; Editing by Stephen Coates

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