Samsung Electronics Co surpassed Apple Inc as the world's top smartphone maker with more than 40 percent shipment growth, and forecast strong sales in the fourth quarter, as it aims to consolidate its lead against rivals.
Samsung, which had little traction in the booming smartphone market until early last year, has since staged a strong comeback and reported a record profit from handset sales in the third quarter on Friday.
Looking ahead into the fourth quarter - when industry demand is traditionally at its peak - Samsung expects sales of mobile devices to remain strong and flat panel TV shipments to increase, Samsung said in its earnings statement.
Profits from the telecoms division more than doubled from a year ago to 2.5 trillion won ($2.2 billion) and accounted for 60 percent of the total profit, mitigating a sharp plunge in earnings from its bread-and-butter memory chips.
Shipments of smartphones jumped more than 40 percent from the preceding quarter and 300 percent from a year ago.
The growth leapfrogs Apple, which sold fewer iPhones in the third quarter from the previous quarter. Apple's iPhone sales slid to 17.1 million units from the second quarter's 20 million units.
Samsung didn't provide third-quarter sales figures, but the percentage growth numbers suggested shipments may have risen to around 27 million units from second-quarter's 19 million units. Nokia, which is also slowly regaining lost ground, sold 16.8 million smartphones.
By 0125 GMT, Samsung shares were up 1.4 percent versus a 1.7 percent gain in the wider market.
Samsung, the world's biggest technology firm by revenue, reported a 4.25 trillion won operating profit for the July-September quarter on Friday, broadly in line with its earlier estimate of 4.2 trillion won.
That was down from 4.9 trillion won a year ago but up from 3.8 trillion won in the preceding quarter.
I expect to see earnings improve slightly in the fourth quarter, and strongly in 2012. Its telecommunications devices business will continue to do very well, and so will non-memory chips, said Lee Sun-tae, an analyst at Meritz Securities.
Samsung, the biggest handset maker in Google's Android camp, however, faces challenges as the new iPhone, introduced earlier this month, is scoring strong sales, while Nokia is fighting back with its first phones based on Microsoft's Windows software.
Sony Corp also announced on Thursday that it would take full ownership of its mobile venture Sony Ericsson in a bid to exploit its music and video.
Samsung on Thursday announced the launch of its Galaxy Note mobile devices, adding to the flagship Galaxy lineup of products. The devices, powered by the Android software, will square off against a series of new models released by Apple Nokia, and HTC Corp.
SOLE PROFITABLE DRAM MAKER
Samsung's mainstay chip business saw its profit more than halve to 1.59 trillion won from a year earlier, but it held up well as its relatively high exposure to lucrative mobile chips helped the firm offset a sharp plunge in prices of commodity computer memory chips.
Samsung was the sole profitable firm among major global DRAM chip makers in the third quarter. Second-ranked computer memory chip maker Hynix Semiconductor and Japan's Elpida Memory swung to deep losses as prices of dynamic random access memory (DRAM) chips used in PCs tumbled about 50 percent in the third quarter.
Its chip business is also benefiting from strong demand for mobile processor chips used in Apple's iPhone and iPad as well as its own Galaxy smartphones.
Samsung expected demand for PCs to remain weak in the fourth quarter because of weak seasonality, while demand for mobile devices and servers will be relatively strong.
I see some signs that chip prices have hit bottom as inventories are running out. However, we don't yet know when the industry is going to pick up since macroeconomic uncertainties overshadow the demand outlook, said Park Hyun, an analyst at Tong Yang Securities.
Samsung's display business posted losses for a third consecutive quarter, as weak demand for TVs and PCs outweighed strong sales of smartphones. But losses narrowed from the previous quarter, helped by strong earnings from OLED display, which is widely expected to replace LCD as next-generation flat-screens in mobile devices and TVs.
Samsung competes with Nokia in mobile phones, Sony and LG Electronics Inc in TVs, Toshiba, Hynix in chips and LG Display in displays.
($1 = 1115.250 Korean won)
(Additional reporting by Ju-min Park and Jungyoun Park; Editing by Jonathan Hopfner and Miyoung Kim)