Samsung emerges as world’s top tech giant
February 4th, 2010 Posted in General, Industry NewsSouth Korea’s Samsung Electronics has emerged as the world’s biggest technology company by sales, overtaking its U.S. rival Hewlett-Packard and German industrial group Siemens, company officials said on Friday.
In a regulatory filing, Samsung reported full-year sales of 136.29 trillion won (US$117.4. billion) in 2009, exceeding HP’s sales of $114.6 billion and $109.8 billion of Siemens.
Samsung, the world’s largest maker of computer memory chips and flat screens, is likely to cement its leading position this year when its sales are forecast to reach US$127 billion, higher than the projected $120 billion from HP.
The company’s 2009 sales were up 12.4 percent from the previous year’s 118.38 trillion won on the back of higher memory chip prices and the stronger demand for products including high-end televisions. Its sales were 98.51 trillion won in 2007 and 85.43 trillion won in 2006, showing that it is expanding nearly 20 percent every year.
Samsung also said its full-year operating profit reached 10.92 trillion won in 2009, up 73.3 percent from 6.30 trillion won in 2008, compared with 8.97 trillion won in 2007 and 9.10 trillion won in 2006.
Company officials attributed the strong performance to solid demand for flat screen televisions and mobile phones as well as higher prices for computer memory chips, driven by the global economic recovery.
The company’s digital media division, which produces televisions and printers among others, sold 44.89 trillion won worth of products last year, up from 42.19 trillion won in 2008.
In the mobile handset business, in which Samsung claims the No. 2 spot after Nokia Corp. of Finland, the South Korean company increased 21.7 percent to 42.09 trillion won. It sold a record 227 million units of mobile phone handsets last year, up 16 percent from 2008, although the global handset market shrank by 10 percent during that period.
Revenue and profits from its semiconductor division also jumped on a rise in both demand and average prices. Sales of the memory chip division, which produces dynamic random access memory (DRAM) chips and NAND flash used to store music and pictures, jumped 20.1 percent to 26.35 trillion won in 2009.
Samsung said global demand for chips was expected to rise this year on tight supply and growth in the market for smartphones.
Sales of the company’s liquid crystal display (LCD) panels increased just 3.5 percent last year due to weakening demand. Samsung is cautious about its LCD panel business this year, citing uncertain supply-demand conditions.
“We see this positive growth and performance flowing on into 2010 as the global economy continues to stabilize,” Samsung vice president Robert Yi told analysts and reporters.
The technology giant expects its profits to further improve this year on higher memory chip prices and growing demand for flat screen televisions, mobile phones and laptop computers.
“We expect positive growth across its businesses in 2010,” the company said in a statement. “Overall demand would steadily increase in line with global economic recovery,” it said.
Samsung plans to increase its capital spending this year to boost its growth momentum. The company, which invested 8.1 trillion won (US$89.7 billion) last year, plans to spend more than 6 trillion this year.
The company plans to strengthen this year its touch-screen handsets and smartphone business, a fast-expanding market. Samsung, which has a 20 percent market share in mobile phones, has only about 3 percent of the smartphone market.
Samsung aims to quadruple its sales of LED-backlit flat panel televisions, which use light-emitting diodes, to 10 million units this year and sell 2 million 3-D models. It also plans to boost sales of tablet computers that will be up against the new iPad when Apple’s latest creation starts shipping in late March.
But industry analysts raise doubts about Samsung’s profitability this year because the local won currency is getting stronger against the U.S. dollar, which undercuts the price competitiveness of its goods overseas.
“The stronger won and the weaker yen will weaken our global competitiveness as we are competing mainly with Japanese rivals,” the company said. South Korean companies compete fiercely with Japanese counterparts for exports in products from televisions to microchips.
In addition, the successful launch in South Korea of the cult iPhone by U.S. firm Apple Inc. and its growing local popularity are posing a major challenge to Samsung, which is struggling to defend its mobile phone market on home ground.
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