Tallahassee Journal

Samsung Returns to Roots in Components as Phones Stall

Samsung Returns to Roots in Components as Phones Stall

Samsung Electronics Co. is relying on a 40-year-old memory-chip unit for earnings growth as sales of its Galaxy smartphones are eclipsed by Apple Inc. and Xiaomi Corp. Buoyant demand for semiconductors, including from competitors in the phone business, and a falling won helped Samsung post fourth-quarter operating profit that beat analyst estimates, even though it slumped 37 percent from a year earlier.Samsung-Banner-Huge

The world’s biggest mobile-phone business, under pressure at the high end from iPhones and in the mid-range from Xiaomi’s Redmi 2, contributed less than a third of earnings, according to analyst estimates. Vice Chairman Lee Jae Yong is leading a strategy revamp by cutting the number of smartphone models, spending $15 billion on a new chip plant in South Korea and reinventing the company as a maker of Web-connected devices.

“Apple and Chinese producers are rivaling Samsung in smartphones, but they are also its biggest customers for components, especially in memory chips,” said Greg Roh, a Seoul-based analyst at HMC Investment Securities Co. “It’s about the right time for Samsung to find the sweet spot from its component businesses rather than from end-product units.”

Shares of Suwon, South Korea-based Samsung rose 0.5 percent to 1,314,000 won at the close of trade in Seoul. The stock fell 3.3 percent last year after a 9.9 percent decline in 2013.