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Last Updated: Friday, 12 January 2007, 08:02 GMT
Memory chips hit Samsung profits
Samsung mobile phone
Samsung has faced stiff competition in the phone sector
Samsung Electronics has seen profits fall after memory chip sales fell and flat screen TVs prices dropped in the last three months of 2006.

The firm saw net profits to 31 December fall 8.5%, to 2.346 trillion won ($2.5bn; 1.2bn), from a year earlier.

The average price of Samsung NAND flash memory chips, used in digital cameras and other devices, dropped 19% in the last quarter from the period before.

Profits were also dented by stiff rivalry in the mobile phone sector.

Challenge ahead

Falling mobile phone prices ate into Samsung's profits, compounded by rising marketing costs.

The firm - the third largest mobile phone maker worldwide - saw profit margins decline in the last three months of 2006.

In addition the strong local currency, the won, posed a challenge to the firm's bottom line as the price of the firm's goods became relatively more expensive overseas.

The vast bulk of Samsung's exports - some 80% - are sent to the US, which saw its currency weaken by around 9% in the last quarter compared to the won.

"Samsung Electronics anticipates challenges in key product areas in the first quarter, after a seasonally weak period," said the firm.

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