Samsung Electronics Reports Second Quarter Results

(Auszug aus der Pressemitteilung)

SEOUL, Korea, July 14, 2006 – Samsung Electronics Co., Ltd. today

announced its financial results for the second quarter of 2006 (ended
June 30, 2006). The company posted net income of 1.51 trillion won on
revenue of 14.11 trillion won. Operating income for the second quarter
was 1.42 trillion won.
„During the second quarter, many companies in the same industry faced
difficulties due to declining prices in mainstay products,“ said Dr.
Woosik Chu, senior vice president and head of Samsung Electronics‘
investor-relations team.
„However, it’s noteworthy that operating profit exceeded market
expectations amid a challenging market environment in the previous
quarter – a result of our competitiveness and focus on innovation. We
expect the second quarter to mark the trough and anticipate improvements
in the second half of this year. Already, we saw market conditions for
NAND flash, LCDs, and handsets stabilizing in the second quarter.“
Operating profit of the Semiconductor Business reached 980 billion won
on revenue of 4.42 trillion won in the second quarter. Operating profit
dropped 12% in the second quarter from the first quarter, mainly due to
a drop in NAND flash chip prices.

In the DRAM business, profit margins continued to improve in premium
products, such as mobile and graphics, while prices for DDR1 and DDR2
were strong amidst difficulties by competitors to migrate to 90nm
processing technology.
Seasonality played a part in the price declines in the NAND flash memory
market, however prices began to stabilize in the middle of May and
conditions are expected to improve in the second half with rising
Introduction of new products that require larger memory such as MP3s,
PMPs, and handsets is expected to boost demand. In addition, conditions
will improve with the seasonal demand pick up in the third quarter and
migration to the finer process technology, in particular 60nm
technology, will reduce manufacturing costs, boosting profitability.
The Telecommunication Network Business posted revenue of 4.28 trillion
won, and operating income of 405 billion won.
The pace of the demand increase is expected to accelerate in the
third-quarter as the overall 3G market grows and demand for replacement
rises. Should sales of Samsung Electronics‘ „Ultra edition“ handsets
gain traction, the company expects both the volume of sales and ASP to
see significant improvement.

The LCD Business reported revenue and operating income of 2.85 trillion
won and 75 billion won, respectively. Sales of 40-inch and larger panels
jumped 87% quarter-on-quarter to 1.2 million panels due to strong demand
for larger TVs. The profitability of the LCD Business in the previous
quarter was a testament to Samsung Electronics‘ competitiveness in the
industry, as the climate for the LCD market was weak.

In the third quarter, increased demand for LCD TV panels is expected to
dominate the industry dynamics. This will square favorably with an
expected rise in demand for IT-related products. Thus, LCD panel prices
are expected to stabilize.
Samsung Electronics plans to boost monthly capacity of its Line 7-1, the
S-LCD joint venture, to an additional 15,000 units during the third
quarter to accommodate the increasing demand for larger TVs and
strengthen its market leadership in this segment. Cost leadership in TV
panels, early adoption of the 7G line and economies of scale continue to
be the strengths of Samsung Electronics.

Digital Media Business posted an operating loss of 60 billion won on
revenue of 1.66 trillion won. Sales remained at the same level despite
seasonality with the favorable sales of its premium-level LCD and PDP
TVs such as the „Bordeaux“ LCD TV. The majority of the 230 billion won
in equity gains was generated from sales of digital media products at
the overseas subsidiaries, reflecting a stronger profit position.
Sales of its Digital Appliance Business increased 13% quarter-on-quarter
to 770 billion won with seasonal gains in air-conditioner sales.
Operating loss was at 3 billion won.