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Samsung makes record profit, but aware phone boom can't last

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Samsung makes record profit, but aware phone boom can't last
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Samsung enjoyed a 47.5 percent rise in operating profit in the quarter from April to June. It was a record at the equivalent of 6.44 billion euros.

But with competition hotting up, profits at its mobile phone division slipped by 3.5 percent from the previous quarter, even with the launch of its flagship Galaxy S4 in late April.

That is important because handsets generate two thirds of its total earnings.

At the same time Samsung announced a major increase in investment, hoping a strong recovery in microchips will make up for weakening smartphone growth and rebalance its profit structure.

Prices for chips – used in personal computers and mobile devices – have recently rebounded.

Samsung warned that global smartphone sales growth could weaken further in the third quarter, and said it expected stiffer competition due to new product launches. Apple is expected to release the iPhone 5S and a low-end iPhone later this year.

“As we go into a typically strong season for the IT industry, we expect earnings to continue to increase,” Samsung said in its earnings statement.

“However, we cannot overlook delayed economic recovery in Europe and risks from increased competition for smartphones and other set products.”