October 16, 2006

SAMSUNG Electronics Reports Third-Quarter Financial Results

Samsung Electronics reports revenue of KRW15.22 trillion,

operating income of KRW 1.85 trillion and net income of KRW2.19 trillion




SEOUL, Korea - October 16, 2006 : Samsung Electronics Co., Ltd. today announced its financial results for the third quarter of 2006 (ended September 30, 2006). The company posted net income of 2.19 trillion won on revenue of 15.22 trillion won. Operating income for the third quarter was 1.85 trillion won.




"Our strategy of producing high performance, differentiated products into multiple end markets allowed us to power ahead and deliver solid third quarter results amid a challenging market environment of the information-technology sector," said Dr. Woosik Chu, senior vice president and head of Samsung Electronics' investor-relations team.




"We anticipate our key business units to experience significant tailwinds in the fourth quarter, a seasonally strong period. Furthermore, our plan to invest an additional 1 trillion won to increase capacity of our memory-chip business is expected to create revenue opportunities next year."



Operating profit of the Semiconductor Business reached 1.27 trillion won on revenue of 4.91 trillion won in the third quarter. Operating profit increased 29.5% in the third quarter from the second quarter, mainly due to strong demand of memory chips from the PC sector.



In the memory-chip business, Samsung Electronics capitalized on the global shortage in supply of DRAM chips that subsequently led to a surge in DRAM prices. A timely redeployment of production from slower-growth products and strengthening higher-growth, premium products such as DDR2, enhanced profit margins by 3.7 percentage points from the previous quarter.



The memory business is expected to see further growth and higher returns in the fourth quarter, a seasonally strong period. The price of DRAM chips is expected to remain strong in the fourth quarter, and the demand of NAND flash memory chips is expected to grow with the introduction of new products that require larger memory such as MP3s, PMPs, and handsets.



In addition, migration to the advanced process technology, in particular 60-nanometer (nm) 8-Gigabit (Gb) NAND Flash technology, is expected to reduce manufacturing costs and improve profitability. Samsung Electronics' plan to invest an additional 1 trillion won to increase production capacity of memory chips is expected to create revenue opportunities next year.



The Telecommunication Network Business posted revenue of 4.71 trillion won, and operating income of 520 billion won.

In the third quarter, robust sales of the "Ultra Edition" premium handsets in Europe helped boost sales to a record 30.7 million units and double-digit profit margins of 11.1%.



In the fourth-quarter, the pace of the demand increase is expected to accelerate as the overall 3G market grows and demand for replacement rises. The company expects both the volume of sales and average sales price (ASP) to see significant improvement with the launching of 3G "Ultra Edition" handsets in various form factors and multimedia handsets.




The LCD Business reported revenue and operating income of 2.996 trillion won and 160 billion won, respectively. Prices of IT panels recovered ahead of the seasonally-robust period and sales of 40-inch and larger TV panels remained strong.



Samsung Electronics' ability to once again outperform an overall weak LCD market reinforced the company's competitiveness in the industry.



Demand for LCD TV panels dominated the industry dynamics. Samsung Electronics sold 3 million units of LCD TV panels, of which sales of 40-inch and larger TV panels amounted to 1.6 million units. Samsung Electronics continues to asset its leadership in the LCD TV panel market, which grew 37% from the second quarter.



Samsung Electronics plans to boost monthly production capacity of its Line 7 to an additional 150,000 units in the fourth-quarter, a busy selling season.



Digital Media Business posted an operating loss of 100 billion won on revenue of 1.64 trillion won, on a parent basis. However, sales of LCD TV, PDP TV and other high-end flat-panel TV fared well, generating formidable profit for the company.



Equity gains, which better depict the global performance of the Digital Media Business, jumped to 540 billion won in the third quarter from 290 billion won in the second quarter. The majority of the equity gains were generated from strong sales of digital media products including LCD TVs.



Sales of its Digital Appliance Business increased 7.6% quarter-on-quarter to 830 billion won from favorable sales of refrigerators and washing machines. Operating loss was at 14.8 billion won.





Revenue by Business
(in trillion won)







Business

3Q05

2Q06

3Q06

Growth













YoY

QoQ





Semiconductor

4.59

4.42

4.91

7%

11%





     Memory

3.47

3.32

3.64

5%

10%





     System LSI

055

0.52

0.59

7%

15%





LCD

2.68

2.85

3.00

12%

5%





Telecommunication Network

4.58

4.28

4.71

3%

10%





     Mobile Phone

4.37

4.04

4.45

2%

10%





Digital Media

1.64

1.66

1.64

(0.3%)

(1.5%)





Digital Appliance

0.85

0.77

0.83

(2.1%)

8%








 Total Revenue

14.54

14.11

15.22

5%

8%












Operating Profit by Business
(in trillion won)







Business

3Q05

2Q06

3Q06

Growth













YoY

QoQ





Semiconductor

1.35

0.98

1.27

(6%)

30%





LCD

0.30

0.07

0.16

(46%)

115%





Telecommunication Network

0.55

0.41

0.52

(5%)

29%





Digital Media

(0.02)

(0.06)

(0.10)

(301%)

(68%)





Digital Appliance

(0.04)

0.00

(0.01)

67%

(336%)








 Total Operating Profit

2.13

1.42

1.85

(13%)

30%












About Samsung Electronics

Samsung Electronics Co., Ltd. is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies with 2005 parent company sales of US$56.7 billion and net income of US$7.5 billion. Employing approximately 128,000 people in over 120 offices in 57 countries, the company consists of five main business units: Digital Appliance Business, Digital Media Business, LCD Business, Semiconductor Business and Telecommunication Network Business.  Recognized as one of the fastest growing global brands, Samsung Electronics is a leading producer of digital TVs, memory chips, mobile phones, and TFT-LCDs.  For more information, please visit www.samsung.com


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