(iTers News) - The much-touted merit of Samsung Electronics’ vertically integrated business operation from TVs and smart phones down to semiconductor chips and display panels is that gains in some business sectors can help offset slumps elsewhere.

The business formula paid off to the effect, helping the memory chip and smart phone giant to emerge the least affected from weak demand for smartphones and TVs in the first quarter ended on March 31 2015.

Once the biggest cash crop, smart phone business fell victims to saturated market demand in advanced market, while losing competition to low-cost Chinese and Indian mobile phone makers in emerging market. Depressed consumer demand for TVs and other consumer electronics devices in Europe and Russia put a drain on its profitability, too.

 Yet, strong shipments of memory chips and SoCs helped to recoup the setbacks in TV and smart phone businesses.

Samsung chalked up a first quarter operating profit of 5.98 trillion won, a whopping 41% drop from a year ago, on consolidated revenue of 47.12 trillion won, which was also 11.7% down year-on-year.

Its smart phone and TV business were the most blamed, For example, its IT and mobile communication business unit, which depends on smart phone business on more than 90% of its sales, saw its operating profit more than halved to 2.74 trillion won in the first quarter from 6.43 trillion won a year ago.

Equally hit was its TV business. Its consumer electronics division, of which sales ranges from TVs to homes appliance to printers, swung back to the red racking up an operating loss of 140 billion won on revenue of 10.2 trillion won.

Weak seasonality for TVs was the main culprit, but compounding the trouble, currency depreciation in the EU and Russia significantly depressed consumer demand for TVs and other consumer electronics devices. .

Semiconductor chip and display panel businesses come roaring back, riding on booming demand for mobile and server computer memory chip as well as mobile SoCs for smartphones.

Robust demand for low-cost smart phones in emerging markets has been boosting up demand for low-power DDR4 and mobile SoCs, as the proliferation of the low-cost Chinese smart phone makers pump up new growth momentum in the mobile phone manufacturing ecosystem. .       ’ .

The semiconductor business chalked up an operating profit of 2.93 trillion won, about 7% up from a year ago on revenue of 10.27 trillion won, which was about 8.5% up year-on-year, bucking weak seasonality.

Its 20-nanometer class migration for DRAM chip kept its fabrication line humming to meet booming demand for DDR4/LPDDR4.  Its earlier-than-expected ramp up to 14nm FinFet process technology also helped land much of foundry chip-making orders.     

The display panel unit turned profit chalking up an operating profit of 52 billion won. The business unit had kept the line busy with meeting a rush of orders for OLED panels for smartphones and LCD panels for premium TVs.

Looking forward, Samsung paints better pictures. With sales of premium smartphones like Galaxy S6 and S edge in full swing, the company expects to see big jumps in demand for semiconductor chips.

Its smart phone business will be on a comeback course to the normal, mainly due to rollout of much-anticipated Galaxy S6 and S6 edge smartphone. Samsung expects to ship about 99 million smart phones in the 2nd quarter, the same as those sold in the first quarter.

For all of 2015, Samsung remains concerned about weaker consumer demand, as depreciation in Euro and emerging market currencies risks to putting a drag on consumer sentiment.

Samsung invested 7.2 trillion won in its capital expenditure for the first quarter, including 4.4 trillion won for the semiconductor business and 500 billion won for the display panel segment.