Samsung Seeks Growth From Component Business

South Korean Company Says Pace of Smartphone Growth May Slow in Third Quarter

Samsung Electronics Co.'s estimated spending of nearly $12 billion to upgrade and invest in its chip facilities this year underscores the South Korean company's reliance on its component business to drive earnings at a time when smartphone profits appear to be hitting a plateau.

While the South Korean company reported a 50% increase in second quarter net profit Friday to a record 7.77 trillion won ($7 billion), margins from its smartphone business—its biggest profit generator for the past year—were squeezed due to hefty marketing expenses tied to its flagship Galaxy S4 smartphone.

"The smartphone market will likely continue to grow ...

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