Samsung Electronics said profit fell 30 percent in the first quarter on declines in memory chip prices and reduced profitability in liquid crystal displays and flat screen televisions.
Samsung, the manufacturer of the Galaxy S smartphone and Galaxy Tab tablet device, earned 2.78 trillion won ($2.59 billion) in the three months that ended March 31, the company announced Friday. That compared with net profit of 3.99 trillion won a year earlier.
Suwon, South Korea-based Samsung Electronics Co. is the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays and ranks No. 2 in cellphones.
Samsung recorded record annual sales, operating profit and net profit in 2010. The company had warned, however, that the outlook for this year was uncertain given weak pricing for components and consumer electronics products that hurt profitability at the end of 2010.
Samsung said sales in the first quarter rose 6.8 percent to 36.99 trillion won.
Robert Yi, a Samsung vice president, described the company's business environment as "difficult" during the first quarter in a release, citing the "rising costs of raw materials, uncertainties in the financial market in Europe and the devastating earthquake in Japan."
The company said that the current second quarter would remain "challenging" due to concerns over the global economy and industry competition.
Samsung's mobile phone business was a relative bright spot for the company. Handset sales declined 14 percent to 70 million devices, but strong sales of smartphones and "high-end mobile devices" — an apparent reference to tablets — boosted profitability, the company said.
Smartphones took up 18 percent of Samsung's total handset sales during the first quarter, up sharply from just 4 percent during the same period last year, Samsung said.
The global popularity of smartphones and tablets has skyrocketed and industry competition has intensified since Apple Inc. released its iconic iPhone and iPad devices.
The stakes are high. Cupertino, Califiornia-based Apple and Samsung are engaged in a legal spat over smartphone and tablet technology.
Apple sued Samsung in a California court earlier this month, alleging Samsung's Galaxy line of phones and tablets copy the iPad and iPhone.
Samsung quickly responded, said it was suing Apple in South Korea, Japan and Germany, accusing the company of violating its rights to 10 smartphone and computer patents.
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