Amid Chip Glut, Samsung Has $674 Million Earnings

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Amid Chip Glut, Samsung Has $674 Million Earnings

Samsung Electronics Co. said Friday it posted a net profit of 880 billion won ($674 million) in the second quarter, down 29 percent from the first quarter, as falling global chip prices took a toll on its chipmaking business. Samsung's second-quarter net income also dropped from its 1.6 trillion won figure of the second quarter of 2000.

Although the results beat expectations of 600 billion to 800 billion won, analysts forecast that the world's largest computer memory chipmaker could lose money in the third quarter. (Analysis, page 4.)

Samsung said its sales dropped to 8 trillion won in the April-June period, down 7 percent from the first quarter, while its operating profits plunged 62.7 percent during the quarter to 600 billion won.

The company said telecommunication sales rose 22 percent and home-appliance sales were up 15 percent. Sales of chips fell 27 percent and digital media sales dropped13 percent.

In an ominous sign for future profitability, operating profits from the company's semiconductor business declined 74.8 percent.

"Sales and profits from the semiconductor business fell, but they were still better than our rivals," a Samsung official said. "Backed by our strong performance in telecom sector, total sales will continue to increase."

Samsung said that it had no plan to cut chip production, but would cut capital expenditures to 5.1 trillion won from 6.1 trillion won this year.

Samsung Electronics shares slipped 0.6 percent to 176,000 won Friday. The company's share price has lost more than 50 percent of its value in the past year as the global chip industry struggles.



by Kim Hyun-chul

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