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Technology

Samsung profits nearly double on record smartphone sales

Bumper sales of its new Galaxy S3 smartphones have bolstered Samsung's position as world

mobile phone leader. In addition, higher sales of PCs and TVs have powered the South Koreanfirm to a record profit.

Samsung's net profit surged to 5.2 trillion South Korean won (3.2 billion euros, $4.6 billion) inthe second quarter of 2012 - up 48 percent from the same quarter a year ago, the technology firmannounced Friday.

Driven by robust demand for its mobile devices and rising sales of its ultra-thin displays, revenuewas up 21 percent to a record high of 47.6 trillion won.

The South Korean company reported profits in most of its divisions, including its display panel

unit, which regained profitability on the back of stronger demand for tablet PCs andsmartphones.

However, the company's chip manufacturing unit reported falling operating profit due to lowerdemand for desktop personal computers and a decrease in chip prices.

Samsung said in a statement it expected the third quarter to become "marginally positive" as itsaw demand for consumer electronics goods to be rising. But it also warned of the potentiallynegative fallout of a worsening debt crisis in Europe.

"Continued fiscal instability in Europe and its effect on the global economy will result in the

possibility of a slower than expected recovery and intensified market competition," saidSamsung Senior Vice President Robert Yi in the statement.

Smartphones defy economic cooling

Market analysts are more bullish as they expect another record profit in the third quarter becauseof higher sales of Samsung's latest Galaxy S3 model.

"The mobile division alone will see an operating profit of 4.8 trillion won in the third quarter,helped by sales of the Galaxy S3 which will lead the firm's overall growth," Hanmag Securitiesanalyst Y.B. Oh told the AFP news agency.

Samsung doesn't reveal precise sales figures for its devices. But market research firm StrategyAnalytics said Friday the company had sold 50.5 million smartphones in the second quarter, thusincreasing its market share to 34.6 percent, compared to 17.8 percent for its rival, Apple.

That included more than 10 million Galaxy S3 smartphones, Strategy Analytics said, which ispart of the Android-powered Galaxy series.

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Strategy Analytics also noted that Samsung had remained the world's biggest seller of all typesof mobile handsets, with a 25.7 percent market share, compared to 23.1 percent held by Finnishmobile phone company Nokia.

Samsung buys Dutch group in return to M&A

By Song Jung-a and Christian Oliver in Seoul

Samsung Electronicshas bought a Dutch maker of display technology for e-readers in the latestsign the worlds biggest technology company by sales is overcoming a long a version to mergersand acquisitions.

The deal to buy Liquavista illustrates Samsungs move away from insistence on making

components in-house and a recognition that it will need to grow through internationalacquisitions. Samsung has been notoriously wary of such expansion since its unsuccessful

purchase of AST in the late 1990s.

More

On this story

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The South Korean company was forced to close the California-based computer maker after amass defection of research talent and a string of losses.

Liquavistas display technology is used for devices such as e-readers, mobile phones and mediaplayers.

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Samsung is not producing panels for e-readers yet but it may enter this business usingLiquavistas panels, analysts said.

The Liquavista deal, for which Samsung did not disclose financial details, comes hard on theheels of a similar agreement to buy Medison, a South Korean medical equipment maker.

There seems to be a clear change in their approach towards growth as they try to diversify their

business by entering new areas, said Kang Chung-won, an analyst at Daishin Securities. Theycan secure technology through organic growth but it takes time. They are considering M&As formore efficiency and time-saving and I think they will become more aggressive in chasing suchopportunities, given their huge cash reserves.

Choi Gee-sung, Samsungs chief executive, confirmed at theConsumer Electronics Show in LasVegasearlier this month that the company would seek more overseas acquisitions. As Samsungis involved in many business areas, it cannot do them all alone. It needs many partners, he said.

Samsung appeared willing to return to M&A in 2008 by acquiring the intellectual property assetsof Clairvoyante, a US licensing company. The year before it bought Transchip, a small Israelinon-memory chip developer, its first cross-border acquisition in a decade.

One of the greatest challenges for integration with other companies has been Samsungs highlyconservative and Korea-centred corporate culture, which has resulted in difficulty integratinginternational staff.

Samsung has ready funds available for M&A, with Won21,790bn ($19.4bn) in cash and cashequivalent as of the end of the third quarter. Its parent Samsung Group pledged to investWon23,300bn by 2020 in new business areas, such as green technology and healthcare.

Samsung reports record profit of $5.9 billionReutersJuly 27, 2012First Published: 10:30 IST(27/7/2012)Last Updated: 12:35 IST(27/7/2012)

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A shop assistant poses with the new Samsung Galaxy S III after it's launch at the Westfieldshopping centre in west London. Credit: Reuters/Olivia HarrisSamsung Electronics Co, the world's top technology firm by revenue, reported on Friday arecord profit of $5.9 billion for the June quarter, as rampant sales of its Galaxy S handset helpedstretch its lead over Apple Inc . September quarter mobile profits are expected to forge further

ahead as the latest Galaxy model enjoys a sales boom before the next iPhone launch, widelyexpected in October, driving Samsung's profit to a record of nearly 8 trillion won. The mobilebusiness brings in around 60 percent of Samsung's earnings.

Profits of the handset division more than doubled from a year earlier and the flat-screen businessswung to a profit as LCD prices stabilised.

Shares in Samsung, which also makes TVs and other appliances, flat-screens, and chips, jumpedmore than 4 percent after the results, outperforming the wider market.

"Solid results from the TV division show its resilience to the euro zone crisis, while the mobile

division has become a strong cash cow on the back of strong Galaxy sales," said Seo Won-seok,an analyst at Korea Investment & Securities.

"Weak memory chip prices remain the biggest concern for Samsung in the third quarter, but itwill again fare better than rivals as its reliance on Apple, which tends to squeeze suppliers quite abit, is small compared to the likes of Hynix and Toshiba. It'll have less margin pressure."

JK Shin, head of Samsung's telecoms business, told Reuters on Sunday that sales of the Galaxy SIII, the most aggressive competitor to the iPhone, were better than his initial forecast of at least10 million units in the first two months after its launch in late May.

It is also preparing a sequel to the popular phone-cum-tablet Galaxy Note later this year tocounter Apple's new product releases.

Samsung, which earlier this year ended Nokia's 14-year reign as the top global handset maker, isestimated to have increased smartphone shipments to 50.5 million in the June quarter, nearlydouble the 26 million iPhones sold.

Apple shipments in the June quarter tumbled 26 percent sequentially as the European economysagged and consumers held off on buying ahead of the release of the iPhone 5.

"Regardless of Apple's performance, Samsung will be strong in the third quarter," said Byun

Han-joon, an analyst at KB Investment & Securities. "Actually, for Samsung, Apple's stumble isa chance."

Analysts estimated that Samsung, which now controls more than a third of the global smartphonemarket, will sell 15 million to 20 million of its Galaxy S III in the September quarter.

Patent battle

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Samsung, valued at $160 billion and the world's leading maker of TVs, said April-June operatingprofit totalled 6.72 trillion won, in line with guidance it issued earlier this month.

That is up 79 percent from a year ago and 15 percent from the previous record -- 5.85 trillionwon in the March quarter.

Still, its net profit of 5.2 trillion won is only half of the $8.8 billion Apple returned in the lastquarter from its iPhone, iPad and Mac computer sales.

Samsung's gross margin of 37 percent also lags Apple's 43 percent.

The two technology giants, locked in bruising patent battle globally, will begin a jury trial infederal court in San Jose, California on Monday. Apple seeks roughly $2.5 billion in damages,plus permanent injunctions on some Samsung phones and tablets, while Samsung is demandingpatent royalty payments.

Samsung said it expected its third quarter -- July-September -- to be marginally positive asdemand for consumer electronic goods, including smartphones and tablets remains strong.

However, it said it expected weak demand for PC DRAM to continue in the third quarter.

Song Myung-sub, a senior analyst at HI Investment & Securities, said chip earnings might pullback slightly in the third quarter.

"But the increase in demand for its products from Microsoft Windows 8 release in Septemberand the iPhone in October will bring demand higher than supply," Song said.

Profit from the telecoms division more than doubled to 4.19 trillion won from a year earlier 1.71trillion won, with sales of 50.5 million smartphones - or 380 every minute.

Its semiconductor business showed a small decline in profit to 1.1 trillion won from 1.79 trillionwon, following weak demand for NAND memory chips and computer memory chips.

Prices of NAND flash memory chips tumbled 46 percent in the first half of this year following a34 percent plunge last year, forcing Toshiba Corp to cut output by 30 percent.

The flat screen division swung to a small profit of 750 billion won from a year earlier loss of 210billion won after a global fall in LCD (liquid crystal display) prices stabilised.

The TV and home appliances business returned 760 billion won, up from 470 billion won.Analysts have said the business has been buoyed by solid sales of high-end TV models with 3Dand Internet connectivity features.

While the next iPhone will likely slow Samsung's handset earnings growth, it will boost theKorean firm's semiconductor earnings as Samsung is the sole producer of processing chips used

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to power the iPhone and iPad, and also supplies Apple with mobile memory chips, NAND flashand display screens.

Samsung Tops Nokia Again as Worlds Biggest Mobile Phone Seller

Samsung Electronics Co. (005930) topped Nokia Oyj (NOK1V) as the worlds biggest seller ofmobile phones for the second straight quarter, according to an industry study.

Samsung shipped 93 million phones in the three months ended June 30, a 26 percent increasefrom a year earlier, giving it 25.7 percent of the market, researcher Strategy Analytics said in ane-mailed statement today. Samsung ended Espoo, Finland-based Nokias 14-year run as theglobal leader in the first quarter.

Asias biggest consumer-electronics company also topped the $219 billion smartphone market,trumping Apple Inc. (AAPL) (AAPL), the researcher said in a separate statement today. The

Suwon, South Korea-based company has introduced new Galaxy model devices and expanded inemerging markets to further its dominance in the handset market.

Nokia sold 83.7 million phones in the second quarter, down 5.4 percent, according to thestatement. The Finnish company controlled 23.1 percent of the market. Cupertino, California-based Apple followed with 7.2 percent and Shenzhen, China-based ZTE Corp. (000063) wasfourth with 4.6 percent.

Samsung Regains Smartphone LeadershipJuly 26, 2012Wayne Lam

This is an IHS iSuppli/IHS Screen Digest News Flash from information and analytics providerIHS (NYSE: IHS) covering results from companies that have announced their second-quartersmartphone and cellphone shipments.

Six months after losing the top position in the smartphone market to Apple, Samsung in thesecond quarter regained leadership as its sales rose 5 percent to 36 million units, up from 34million in the first quarter. Meanwhile, Apple suffered a 26 percent decline in shipments to 26million units, down from 35 million in the first quarter, as presented in Table 1.

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Samsungs modest increase was propelled by strong growth in high-end smartphone shipments.

Apples shipments in the second quarter were impacted by a combination of factors,

including macroeconomic variables, increased competition from newer smartphone

offerings and delayed purchasing among consumers who are waiting for the availability ofthe next iPhone model. All this led to a buildup of channel inventory, resulting in lower-

than-expected iPhone volumes.

Please note that the shipment information contained in this news flash and the tables representoutcome from cellphone and smartphone brands that have already reported results or guidancefor the second calendar quarter of 2012. Brands that havent reported yet are not included.

While the other smartphone companies disclose exact shipment numbers for overall cellphonesand smartphones, Samsung doesnt provide precise figures, instead offering general guidance.Because of this, the Samsung cellphone and smartphone shipment numbers shown in this release

are estimated, and may differ from the interpretations of others.

At the end of the first calendar quarter, the supply-and-demand equation for iPhones was

in balance, said Wayne Lam, senior analyst, wireless communications, for IHS. However,

by the end of the second quarter, about 3 million iPhones built up in the sales channel that

werent sold to consumers. This contributed to the slowdown in Apples shipments during

the quarter, reminiscent of the deceleration Apple experienced in the third quarter of last

year as consumers waited for the release of the iPhone 4S. Apple should see a rebound in

shipments with the introduction of the next-generation iPhone model.

Meanwhile, smartphone shipments for Nokia declined further by 14 percent in the second

quarter to 10 million units, down from 12 million in the first quarter.

Nokia took an important step in its transition to the Windows operating system with sales of 4million Lumia models in the second quarter, Lam said. However, that was less than half of the

total number of smartphones shipped by the company during the quarter. Thus, smartphonesusing the legacy Symbian operating system still outsold the Lumia Windows-based phones,indicating that Nokia still has a long to go to regain its footing in the market.

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Samsung and Apple are vying for the top spot in the smartphone segment, with leadership

sometimes switching from quarter to quarter. However, the reality is that the market

increasingly is becoming a two-horse race, with Apple and Samsung enjoying a shared

domination of the industry because of their respective strategies.

Apple traditionally had created product designs that not only anticipate users' needs but producenovel functions that consumers have yet to articulate, Lam observed. In many ways, Apple isthe taste-maker for the mobile industry with its pioneering use of multi-touch navigation, alongwith an intuitive user interface and experience. In contrast, Samsung's market advantage is thatit executes efficiently as a fast follower in terms of design and manufacturing, producing

dozens of smartphone models per year. Samsung monitors the big trends of smartphone designs,user needs and un-met market opportunities, creating products to fit those markets quickly andefficiently. In short, Apple leads with a single design that consumers gravitate to, whileSamsung creates many designs and pursue the ones that customers respond to. Hence,

Apple is more a thought leader, while Samsung is a very good and very quick thought

follower in terms of product design.

For example, Samsung has successfully addressed all price segments of the smartphonespectrum, not just the high end of the market but also the midrange and particularly the low end,Lam noted. Furthermore, Samsung responds quickly to design leaders like Apple to createvariations of similar-themed products based on the Android platform. It also tends to look foropportunities not yet addressed by Apple, such as smartphones with larger screen sizes. Here,Samsung was at the forefront of designing smartphones with a wide range of screen sizes toaddress different market needs.

While Apple and Samsung pursue varying product design strategies, they share a commonattribute: the ability to adapt.

Apple and Samsung have risen to the top partly because of slow adaptation among other

competitors to the new smartphone paradigm heralded by the iPhones arrival in 2007 ,

said Daniel Gleeson, mobile media analyst for IHS. The consequences of not adapting quicklyare dire. Both Nokia and RIM are in the middle of costly platform transitions amid slumpingsales, whereas Motorola has already been swallowed up by Google.

Samsung is clearly the best in the industry at reacting and has the resources to pursue almostevery technological innovation in some fashion, Gleeson added. Meanwhile, Apple is showing

clear signs of being a nimble organization. The latest update to Apples iOS featured a switch inits maps application that will give the company much more freedom to innovate in locationservices in the future. This adaptability will be tested much more in the future as the design andcapabilities of other smartphones are now matching those of the iPhone.

At the manufacturing level, there appears to be more similarities than differences between Appleand Samsung. Both are successful in tightly controlling their supplier base. And althoughSamsung still will have many different hardware designs in its smartphone portfolio, thecompany is moving toward consolidation of parts and designs. Furthermore, the cellphone

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division of Samsung leverages Samsungs internal semiconductor and display component supply

chain to create scale and efficiency that can compete with Apple's leverage in the market.

Meanwhile, both companies have established ecosystems that that provide competitiveadvantages. Apple's closely guarded and carefully curated iOS platform and ecosystem is

essential to its success. For its part, Samsung has begun to set itself apart from other Androidmanufacturers, and is establishing a user base that is loyal to the company and brandtoSamsunginstead of to Android in general.

With the Galaxy SIII, Samsung launched the Samsung Music Hub featuring its own musicstreaming and download service in which the consumer has a direct billing relationship withSamsung, Gleeson said. Samsung is trying to replicate the strong loyalty iPhone users have toApples phones, ensuring a solid base for future sales. While almost all Android manufacturerstry to provide some user-interface differentiation to add value to their brands, this is one of thefirst instances of a smartphone manufacturer directly offering consumers a service.

In the overall cellphone market, Samsung maintained the No. 1 rank, as presented in Table 2.

Samsung profits fail to meet estimates

Samsung Electronics, the world's largest maker of TVs and mobile phones, reported a second-quarter profit that missed analysts' estimates after chip prices weakened and smartphone outputfailed to keep up with demand.

Net income in the three months which ended on June 30 totaled 5.19 trillion won ($4.4 billion),

the Suwon, South Korea-based company said in a statement today. The average of 25 analysts'estimates compiled by Bloomberg was profit of 5.54 trillion won. Sales in the quarter at 47.6trillion won also lagged behind estimate for 49.8 trillion won.

Samsung, trading leadership of the smartphone market with Apple, said in June its productioncapacity is stretched to meet demand for the Galaxy S III device after its May debut. Asia'sbiggest electronics maker is also introducing TVs with the latest display and Web technologies

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while diversifying into semiconductors for mobile devices to keep its dominance across thebusinesses and weather a global economic slowdown.

Since the macro economy isn't doing well, there are concerns, Lee Sun Tae, a Seoul-basedanalyst at NH Investment & Securities, said before the announcement. Even Samsung can't be

free from the impact of that. Memory chips are recovering, but not so strongly. TVs will slowtoo.

Advertisement

Operating profit at the telecommunications business totaled 4.19 trillion won, Samsung said inthe statement. That compared with the 4.4 trillion won median of four analyst estimates compiledby Bloomberg News.

Samsung probably shipped 50 million smartphones in the second quarter, Matt Evans, a Seoul-based analyst at CLSA Asia- Pacific Markets, wrote in a June 20 report. He cut his estimate from53.4 million units, citing lower-than-expected sales of cheaper models in emerging markets, andcompetition from Huawei Technologie. and ZTE.

Galaxy S III

Shipments of the Galaxy S III, the latest version of Samsung's best-selling smartphone line-up,probably totaled 7 million units by the end of June since the model went on sale the previousmonth, Song Myung Sup, a Seoul-based analyst at HI Investment & Securities, wrote in a June27 report.

That was fewer than expected as production was hampered by a shortage of components such aschips and cases, he wrote.

Samsung is unable to keep up with demand for the new phone and doesn't have trouble sourcingparts, the company said in an emailed statement on June 28. A delay in shipments in the US is atemporary situation, according to the statement.

Sales of the Galaxy S III would probably pass 10 million units in July, J.K. Shin, head of themobile business said on June 25.

Overtaking Nokia

The Korean company overtook Nokia as the world's largest handset maker for the first time andregained the lead in smartphones from Apple in the first quarter.

Samsung has been fighting patent battles related to mobile- phone technology and design formore than a year with Apple, also the South Korean company's largest customer. Apple, on June29, won a US court order to block sales of Samsung's Galaxy Nexus smartphone, the firstsmartphone to use Google's Android 4.0 operating system.

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Samsung is also the world's biggest maker of memory chips.

The price of the benchmark DDR3 2-gigabit DRAM averaged $1.03 in the last quarter,compared with $1.82 a year earlier, according to data compiled by Bloomberg.

The price drop pushed Elpida Memory to file for Japan's biggest bankruptcy in two years inFebruary. Earlier this month, Micron Technology agreed to buy the bankrupt chipmaker todouble its market share after four consecutive quarters of losses.

PC Shipments

Global PC shipments slipped 0.1 per cent to 87.5 million units, Gartner said this month. Fellowindustry researcher IDC also said shipments fell 0.1 per cent, compared with the 2.1 per centgrowth it predicted in May.

In the market for NAND flash chips, another type of memory used in portable digital devices

such as smartphones, industry supply is set to decrease with Toshiba Corp. cutting output. TheJapanese chipmaker said on July 24 it will reduce its NAND output by 30 per cent from July.

Samsung, the exclusive manufacturer of Apple-designed chips powering the iPhone and the iPad,has been diversifying away from PC DRAM to more profitable semiconductor products used inmobile devices and servers to beat downturns in the computer- memory industry.

Last month, the company said it plans to spend 2.25 trillion won to build a new plant makingmobile-phone processors. Samsung plans to spend 15 trillion won on the semiconductor businessthis year.

TV Sales

Samsung, also the world's biggest maker of televisions and flat-panel screens, had profit in thebusinesses even as industrywide demand slows.

While flat-screen TV sales aren't picking up, the company is benefiting from demand fordisplays used in mobile devices. Operating profit at the unit making panels for smartphonesincluding Samsung's own Galaxy models more than tripled in the second quarter, accounting for86 per cent of earnings at the display business, according to IBK Securities estimates.

Global TV shipments fell for the first time since 2004 last year, according to DisplaySearch, part

of NPD Group. Worldwide TV shipments fell about 8 per cent in the first quarter as sales ofliquid-crystal-display models dropped on an annual basis for the first time, the research companysaid on June 20.

Samsung Group, Quintiles Plan $266 Million Venture to Make Biologic

DrugsBy Jun Yang - Feb 25, 2011 1:32 PM GMT+0530

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Facebook Share LinkedIn Google +1 0 Comments Print QUEUE

Q

Samsung Group, the South Korean company whose businesses range from electronics to ship-building, will partner with Quintiles Transnational Corp. to make biologic drugs as it seeks newbusinesses to drive growth.

The venture, with 300 billion won ($266 million) in capital, will begin building a plant in theSongdo district of Incheon, near Seoul, in the first half of the year, Samsung Group said today. Itwill contract-make medicines made from living cells, and Samsung Group plans to expand intoproducing copies of biologics including Rituxan, the leukemia and lymphoma treatment sold byRoche Holding AGand Biogen Idec Inc.

The investment will help Samsung Group,South Koreas largest industrial group, tap a marketthat boasts 5 of the worlds 10 bestselling medicines. The Seoul-based group may exceed itstarget to generate 1.8 trillion won a year by 2020 from biopharmaceuticals because of thedemand for those medicines, Executive Vice President Kim Tae Han said.

Biopharmaceuticals are a globally hot market, Shin Ji Won, an analyst at Mirae Asset

Securities inSeoul, said by telephone. Samsung has repeatedly expressed interest in the areaand the business plan is now more visible, he said.

The venture plans to start supplying biologic products in the first half of 2013. Most of themedicines, to fight diseases such as cancer and arthritis, will be sold overseas, the group said.Biologics include arthritis drugs Remicade, made by Johnson & Johnson, Enbrel from AmgenInc., and Humira from Abbott Laboratories.

Production, Technologies

Samsung Electronics Co. and Samsung Everland Inc. will each own a 40 percent stake in the

venture, withSamsung C&T Corp. and Quintiles each holding 10 percent, the group said in astatement. Samsung affiliates will focus on production, while Quintiles will help developtechnologies, SouthKoreas Ministry ofKnowledge Economysaid in a separate statement.

Samsung Electronics, the groups flagship company, declined 0.3 percent to 926,000 won at the

3 p.m. close of trading in Seoul, while Koreas Kospi index gained 0.7 percent.

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The Success Story of Samsung Electronics: How It All Began

June 1 2012 at 3:35 AMPermalinkComments (1) Weve shared with you,hereon Samsung Village, how Samsung started out as a

small trading company in 1938, selling noodles and dried seafood. From that

humble beginning Samsung has evolved into a brand that resonates with globalleadership in various industries including IT, shipbuilding and engineering, just toname a few.

Of numerous success stories, that of our Samsung Electronics affiliate is truly an

amazing one. Samsung Electronics English blogSamsung Tomorrowis running a series

on the companys more than 40 years of history and wed like to walk you through some

of the highlights of the companys milestone achievements.

The Birth of Samsung Electronics

On Dec. 30, 1968, Samsungs founding Chairman Byung-chull Lee and otherexecutives gathered for a meeting where a crucial decision to enter the electronicsbusiness was made. Thus on Jan. 13, 1969, Samsung Electronics was born.

By November 1970, Samsung succeed in producing 12-inch black-and-whiteTVs, and just two months after the production it exported the TV sets toPanama.

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Mass Production Begins

In 1972, Samsung set up a Braun-tube bulb factory and after extensive investmentand expansion of production lines, it also established two black-and-white TVlines with a capacity to produce 480 thousand TVs a year.

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Line of Products

As Samsung established its own production system and accumulated technology,it pushed to produce its own TV model. And in April 1973, the first Samsung-developed TV product was born: the 19-inch transistor black-and-white Maha506.

Following the success of the Maha 506 TV, Samsung expanded into otherelectronics categories such as refrigerators, air conditioners, washing machines,fans, electric stoves and more.

Samsung reached the 5 million milestone in the number of TVs produced inDecember 1978. In May of the same year, Samsung had already expanded its

black-and-white TV lines to become the worlds No. 1 manufacturer. Also inDecember 1978, Samsungs overall exports reached 100 million dollars.

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Semiconductor Business

Samsung Electronics merged Samsung Semiconductor in January 1980 in acombination that helped create synergies in production of both electronics andsemiconductor parts. The merger set the foundation for Samsung to become aglobal leader that it is today in semiconductors.

Global Expansion

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Samsung Electronics America was established in July 1978 as SamsungElectronics wholly-owned subsidiary and set up its own service system in thecountry.

Samsung Electronics first overseas manufacturing subsidiary was set up in

Portugal in 1982. The global manufacturing network expanded to include the U.S.in 1984, the U.K. in 1987 and Mexico in 1988.

Semiconductor Breakthrough

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In October 1984, Samsung introduced the industrys first 256K DRAM, justthree months after it successfully developed the 64K DRAM. Production of the256K DRAMa technological breakthrough only a handful of companiesglobally were able to mustermarked a defining moment for Samsung in itsgrowth as a leading semiconductor manufacturer.

Samsung Group said in May it has set aside 23.3 trillion won to spend on five new businesses by2020, with 2.1 trillion won for biopharmaceuticals. The group expects annual revenue from thefive businesses to reach 50 trillion won by 2020.

The venture represents a significant step in Samsungs investment strategy in future growth

engines, the group said.

Anand Tharmaratnam, Quintiless head of clinical development in the Asia-Pacific region,wasnt immediately available to comment on the venture.

Biosimilar Production

Samsung Group will also develop so-called biosimilars, or copies of biopharmaceuticals, andbegin producing them in 2016 starting with Rituxan, Kim said at a briefing today.

Rituxan has patent protection in the U.S. until 2018 and in the rest of the world through 2013,

Nina Schwab, a Roche spokeswoman, said in May last year. It generated sales of $6.11 billionlast year, making it the worlds ninth best-selling medicine, according to data compiled byBloomberg.

Global sales of biosimilars are forecast to expand more than 40-fold to $90.5 billion a yearbetween 2010 and 2020, according to the ministrys statement.

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Samsung Claims Top Spot for Smartphone Shipments

Posted InMobile,News- ByQuincySS on Saturday, April 28th, 2012 With1 Comment

Samsung is now the number one phone manufacturer. Nokia and Apple make up the second andthird places.

Last friday, Samsung reported first quarter earnings that included shipments of 93.5 millionunits, surpassing Nokia, which has been the top producer by volume of mobile phones for 14years.

Samsung, is one of the fastest growing technology companies in the business and is looking tocontinue its growth with the release of the Samsung Galaxy S3 being launched on the 3rd.

Even with a networth of about $190 billion, Samsung is far less valueable than Apple. The mostvaluable company in the world, who is now valued at a massive $562 billion.

Part of Samsung success is their speed in getting involved in new markets. An example of this is

when Apple released the iPhone, Samsung was one of the first major competitors to start gettingits touch screen products in the market.

Samsung is one of the tech world biggest players, and produces some of the most populargadgets on the market

Samsung overtakes Apple in smartphone shipments

Samsung had 24% of the global smartphone market

in the third quarter of the year

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Continue reading the main story

Related Stories

Samsung profits hit by chip arm Nokia jumps off burning platform Mobile firms vs the patent trolls

Samsung overtook Apple to become the world's biggest shipper of smartphones between Julyand September.

Research from Strategy Analytics showed that Samsung shipped 27.8 million smartphones in thethree-month period, compared with 17.1 million from Apple and 16.8 million from Nokia.

The consultancy said Apple's growth was hindered by customers waiting for the launch of thenew iPhone 4S.

Apple's number four slot in total handsets was taken by China's ZTE.

Nokia was the top handset shipper with a 27.3% market share, followed by Samsung with 22.6%and LG with 5.4%.

ZTE took 4.7%, pushing Apple into fifth place with 4.4%.

The report came shortly after the release of Samsung's third-quarter results, which showedprofits falling 23%as strong growth in its mobile phone business was overshadowed by a poorperformance in the memory chip arm.

Global smartphone shipments Q3 2011Company Shipments (millions) Market share

Source: Strategy Analytics

Samsung 27.8 23.8%

Apple 17.1 14.6%

Nokia 16.8 14.4%

Others 55.3 47.3%

Handset profits more than doubled to 2.52tn won ($2.3bn; 1.4bn) on strong sales from itsGalaxy smartphones.

"Samsung's rise has been driven by a blend of elegant hardware designs, popular Androidservices, memorable sub-brands and extensive global distribution," said Alex Spektor fromStrategy Analytics.

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"Samsung has demonstrated that it is possible, at least in the short term, to differentiate and growby using the Android ecosystem."

A total of 117 million smartphones were shipped in the third quarter, up 44% from the sameperiod last year.

Nokia's market share for smartphones fell from 33% in the third quarter of 2010 to to 14% thistime round.

"The transition from Symbian to Microsoft as Nokia's main smartphone platform has clearlybeen a very challenging process this year," said Tom Kang from Strategy Analytics.

"The recent launch of the new Microsoft Lumia portfolio has helped to raise Nokia's profile."

South Koreas economy

What do you do when you reach the top?

To outsiders, South Koreas heroic economic ascent is a template for

success. But now it has almost caught up with the developed world it

must change its approach

Nov 12th 2011 | SEOUL | from the print edition

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IT IS a crisp autumn morning in Seoul, and a hopeful fisherman sits dreaming by the

Cheonggyecheon stream as the world bustles happily by. Glass skyscrapers rise behind himhousing the capital's new financial district. The shopfronts at their base are among the swankiestin Asia. Office workers, families and schoolchildren amble past. Busking fills the air. The watertumbles past plum trees and willows.

Twenty years ago, this background would itself have seemed a dream for anyone foolish enoughto be trying to fish the Cheonggyecheon. Its waters, dirty and hidden, were trapped beneath aroaring highway; its surroundings were a slum of sweatshops, metal bashing and poverty. Thereclamation of the Cheonggyecheon, one of the great urban-regeneration projects of the world,has about it the air of a dream achieved. So, to a large extent, has the Korea through which thestream flows.

Related topics

Small business United States Samsung Organisation for Economic Cooperation and Development Asia

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In 1960, in the aftermath of a devastating war, the exhausted south was one of the poorestcountries in the world, with an income per head on a par with the poorest parts of Africa. By theend of 2011 it will be richer than the European Union average, with a gross domestic product perperson of $31,750, calculated on a basis of purchasing-power parity (PPP), compared with$31,550 for the EU. South Korea is the only country that has so far managed to go from being

the recipient of a lot of development aid to being rich within a working life.

For most poor countries, South Korea is a model of growth, a better exemplar than China, whichis too vast to copy, and better, too, than Taiwan, Singapore or Hong Kong. All three are richerthan Korea but all are, in different ways, exceptions: Singapore and Hong Kong are city states,while Taiwan's disputed sovereignty makes it sui generis.

South Korea has not merely grown fast. It has combined growth with democracy. Though itsspurt began under a military dictator, Park Chung-hee, for the past 25 years the country has had avibrant parliamentary system. Korea scores the same as Japan in the democracy tally kept byFreedom House, a think-tank in Washington, DC. No other Asian country does as well. At the

same time Korea has combined growth with equity. Between 1980 and 1997, its Gini coefficient,a measure of income inequality, fell from 0.33 to an exceptionally low 0.28, before rising backup during the 1997-98 Asian crisis. In 2010, the level was 0.31, a bit worse than Scandinaviancountries, a bit better than Canada.

A model that worked

Now Korea can add resilience to its roster of achievements. It was walloped during the globalfinancial crisis, but recovered faster than any other rich country. Between June 2008 andFebruary 2009, Korea lost 1.2m jobs. South Korea's relatively open financial system made itvulnerable to the volatility in world markets, a vulnerability that continues. This September,

foreigners withdrew over 1.3 trillion won ($1.1 billion) from the stock market and the currencyslumped 10%.

Yet in 2010, GDP grew by 6%. This year's expansion is likely to be 4%. The unemployment rateis now a covetable 3%. Some of the recovery is the result of Korea's happy dependence onChina: it exports more capital goods to China relative to the size of its economy than anyoneelse, even Germany. But this is only part of the explanation (which is just as well given China'sslowdown). The government also initiated a public-works scheme that is mopping up over 2% ofthe labour force. It introduced an old-age pension and began, then expanded, an earned-incometax credit. All this from President Lee Myung-bak, who was once chief executive officer ofHyundai Construction and is widely assumed to be excessively friendly to big business.

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Korea's relentless convergence towards America's standard of living (see chart 1) has barely

missed a beat. China's dollar GDP per person would have to grow at 7.5-8% a year for 20 yearsto reach the heights Korea has already scaled. If the Korean economy goes on growing at 4.5% ayear and America's at 2.5%, Korea would overtake America (in PPP terms) only a few yearslater.

To keep growing that impressively, though, Korea will need some new tactics. And it will needto develop them from scratch. When a country or a company is playing catch-up it can look atwhat others are doing and do it better. This Korea has done well. Hyundai has outcompetedToyota in the market for reliable, efficient, cheap cars. Korea's shipyards have beaten everyonethrough economies of scale.

All change

But this way of doing things works only when others have blazed a trail before you. As you jointhe ranks of the richest, you run out of beaten track to follow. Your economy comes to dependmore on innovation and on learning from your own mistakes than on improving on the successesof others. The South Korean model of 1960-2010 remains an example for developing countries;but Korea itself now needs something new.

The Korean model had four distinctive features: a Stakhanovite workforce; powerfulconglomerates; relatively weak smaller firms; and high social cohesion. All these are eithercoming under strain, or in need of reassessment, or both.

South Koreans lay great store by education and hard work. They put in 2,200 hours of work ayear, half as much again as the Dutch or Germans. Their reaction to the 2008 slump was to workharder still. During the 2009-10 recovery, reckons Richard Freeman of Harvard University,Korea had the second-largest increase in hours worked in manufacturing, after Taiwan. And thequality of labour has been even more important than the quantity. Along with Finland andSingapore, Korean schools regularly top international comparisons of educational standards,such as those run by the Organisation for Economic Co-operation and Development (OECD), a

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rich-country club. Korea spends a larger share of GDP on tertiary education than any richcountry other than America. Given relatively low wages, this superbly educated workforce ishard to beat.

But with Korea already top of the league tables, it is harder to generate further jumps in income

from big increases in hours and skills. Indeed, the immediate problem is merely to maintain itsexcellence. According to Yeong Kwan Song of the Korean Development Institute (KDI), athink-tank, companies are starting to worry that graduates are emerging from university with thewrong skills. On some estimates, half of recent graduates are failing to find full-time jobs and aregoing into further study or part-time employment. So while general education remains good,some industrial skills may be declining.

One way to boost the skilled labour force might be to have rather more people working ratherfewer hours. The extra people would be women, often highly educated ones. Quite a lot ofKorean women stay at homethe participation rate for women aged 25-54 is only 62%, thefourth-lowest in the OECDeven though they are usually better educated than men. In almost

all rich countries, the best-educated women are more likely to work than their less-educatedsisters. Not in South Korea.

Shorter hours might encourage some of these skilled women into the workforce. So might achange in attitudes to schooling. The job of supervising a child's education falls to women, whichis one of the reasons why relatively few women have jobs.

This does not mean that they have a lot of children instead. Korea has a fertility rate of 1.2, oneof the lowest in the OECD. This is in part because those good educations make having children apricey proposition. An unusually large part of the spending that makes Korean education so goodis private, not public. The government spends just under 5% of GDP on education, slightly below

the rich-country average. Families add an extra 2.8% of GDP on top of that, easily the highestrate in the OECD. At universities, family spending is three times that of the state. And familiesspend an estimated 8% of their household budgets on after-hours programmes for each child, aninvestment which explains the effort mothers put into making sure it pays off. If you have threechildren, their after-school activities alone could swallow up a quarter of the household budget.

The power of conglomerates. Much of South Korea's miracle has been the work of bigconglomerates, or chaebol. Barry Eichengreen of the University of California, Berkeley, arguesthat they are among the most technologically and commercially progressive agents in the

Korean economy. Samsung Electronics, forinstance, one of 83 constituent parts of the Samsungempire, sells more smartphones than Apple. Korea's shipyards have just started work on a newclass of container ships called the triple E-class which are easily the largest container ships everbuilt (Maersk, the ships' buyer, says the three Es refer to economy of scale, energy efficiency andenvironmental cleanliness; simpler just to see them betokening EEEnormity). Korea's largecompanies employ slightly less than a quarter of the workforce and produce more than half thecountry's output. Chaebol-alikes exist round the world, from Carlos Slim's Group Carso inMexico to Lee Ka-shing's holdings in Hong Kong.

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The surviving chaebol have proved resilient. During the 1997-98 crisis, some chaebol's debt-to-equity ratios soared to over 500%; half of themwent bust and conglomerates were widely seenas a drag on the economy. Now, those that came through the time of trial have returned toprofitability and respectable debt ratiosbut their success still has a downside.

After the founding fathers

The chaebol system has proved prone to fraud, dodgy accounting and illegal politicalcontributions. Many of the companies depend to an unhealthy degree on a founder or his family.About half the managers of Samsung's firms used to work in the chairman's secretariatand thusdirectly for the founder or his sonand owe their promotion to the associated patronage. As withany family business, the moment of greatest danger is when the leadership passes to the nextgeneration. Samsung passed this test in 1987 when the founder handed over to his son, Lee Kun-hee. Now Mr Lee's son, Jay Y. Lee, has been appointed chief operating officer of SamsungElectronics and a new transition looms. If Mr Lee the third has business acumen, fine. If not, thewhole country could suffer.

Find out how much of an Apple iPhone is actually a

Samsung with our"teardown" infographic

Moreover, there are signs that the chaebol may be stifling innovation and entrepreneurship. Theyhave proved expert at applying and improving existing technology, even the high technology oftouch-screen smartphones. But except in some internet businesses and computer gaming, SouthKorea has few start-ups or cutting-edge technology firms. It lacks nationwide venture-capitalbusinesses, says Hasung Jang, the dean of Korea University's Business School, because eachchaebol has one of its own. The firms snap up the best and brightest and turn them into companymen. Mr Jang compares the conglomerates to light-hogging trees in a forest: their canopy may beimpressive, but it is hard for anything to grow underneath.

Koreans perceive fewer opportunities for entrepreneurship than any of their peers in rich

countries except Japan, according to an annual survey by the Global Entrepreneurship Monitor,set up by the London Business School and Babson College, Massachusetts. As South Koreamoves towards the technological frontier, such attitudes will have to change. Innovation is notgoing to come if everyone shelters from risk in the chaebol.

Weak small firms. There is a huge productivity gap between Korea's export-oriented chaebol andsmall and medium-sized firms (SMEs) which dominate services. Value added per worker insmall firms is less than half that in large ones. SMEs' operating profits were 4.5% of sales in

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2007, compared with about 7% for large firms. Small firms spend about half as much on researchand development as large ones per unit of sales and borrow far more relative to assets. Overtime, their performance seems to be getting worse. Korea, in short, has first-world manufacturingexporters and third-world services.

Coddled, not coping

There are several reasons for the mismatch. Small firms are crowded out of markets for peopleand skills by the chaebol. And because chaebol pay scales often rise according to years inservice, they squeeze wage bills by firing older workers, with the service sector working as arecycling system for surplus labour. Small firms have also been coddled by the government.Korea maintains various entry barriers to shelter mom-and-pop stores from competition.Government support to SMEs rose from under 6 trillion won in 2008 to 10 trillion in 2009.Public credit guarantees rose from 33 trillion won in the Asian crisis to almost 60 trillion won in2009. Last year, the government requested banks to roll over their loans to small firms.

Randall Jones of the OECD argues that all this help has made SMEs less, not more, efficient, and

damaged competitiveness. The richest economies are switching into services that in Korea aredominated by small firms which cannot compete.

Social cohesion. Korea's equal distribution of income is changing. Judging by the relationshipbetween the richest and poorest tenth, Korea is becoming more unequal than it used to be.Worse, the growing number of poor people is disproportionately elderly. In other rich countries,people between 66 and 75 are no more likely to be poor than the population as a whole. InKorea, they are three times as likely to be poor. This is all the more worrying because the lowbirth rate means the country is ageing more rapidly than any other rich country. In 2009, peopleover 65 were outnumbered ten to one by the working-age population. By 2050, there will beseven over-65s for every ten working-age adults. Disproportionate old-age poverty would have a

huge impact on the social backing for policies designed to foster growth.

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Not

to be left behind

Korea's equitable income distribution used to provide a sense that society as a whole wasbenefiting from breakneck catch-up. But discontent is rising both about inequality and about therole of the chaebol, producing growing disenchantment with both main political parties. Therecent election for mayor of Seoul produced an upset win for a left-wing anti-establishmentmaverick.

It is proving hard to resist the trend towards inequality because of another basic feature of

Korea's economic model: total tax revenues are just 26% of GDP. Taxes are especially low onlabour, a choice designed to boost work and foreign investment. But as a result, social spendingis low (11%); public spending on family benefits is exceptionally low (less than a quarter of therich-country average); and the tax-benefit system is the worst in the OECD at reducing inequalityand poverty. Korea's tax-benefit system reduces poverty by only 18% (compared with what itwould have been without the benefits). Sweden's tax-benefit system cuts its poverty rate by 80%.

Korea, argues Mr Jones, needs to increase taxes and social spending in order to reduce povertyand inequality. One reason it is reluctant to do this is because it is afraid of the impact on jobs. Itschanging demography also suggests caution in expanding the social safety net too fast or far, asit will be used ever more over the decades to come.

And then there is the ever-present imponderable: the possible need, at some point, to finance thehorrendous costs of reunification with destitute North Korea when that state collapses. Thatwould make the vast expense of unification in Germany pale into insignificance. At some pointin the future Korea may need all the room for future fiscal expansion it can get.

A bridge to the future

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The problems of the South Korean model should not be allowed to obscure either its

achievements or its continuing strengths. True, over the past 40 years annual GDP growth hasdeclined from about 10% to 4-5% (see chart 2). Business investment has halved from over 30%of GDP in the mid-1990s to 17% in 2010but that is still 50% over the OECD average. Furtherdeclines in growth seem likely.

That is not surprising. As Kwanho Shin of Korea University and Dwight Perkins of Harvardshow, every country's growth starts to ebb as its income reaches about $10,000 a year. SouthKorea has kept going longer than most. If it can increase public spending a little to reduceinequality and poverty, boost its labour supply by encouraging more women to work and avoidcompromising its educational standards and penchant for hard work, then it should be wellplaced to pull ahead of Europeans and catch up with America, too.

South Korea has long been a model for outsiders. President Kennedy's chief economic adviser,Walt Rostow, wanted to use it as a testing ground for his theories about stages of economicgrowth. But Koreans do not see themselves as a blank slate, or as a new world power. Theystress a long legacy of openness and innovation. Before the wars of the 20th century Korea was abridge between the more closed worlds of China and Japan. It developed movable metal type twocenturies before Gutenberg; its last imperial dynasty benefited from checks and balances moreextensive than in its Chinese prototypes. The more Korea brings these qualities of domesticinnovation to the fore, the better its chances of blazing a new trail for itself.