Samsung saw profits fall in the second quarter of the year while sales jumped thanks to strong demand for memory chips and flat-panel displays, it said.

South Korea's largest electronics company said net profit in the April to June quarter was 1.5 trillion won ($1.6 billion as of June 30, the last day of the period being reported) against 1.7 trillion won in the same period last year. Sales were four per cent higher at 14.1 trillion won.

The three-month period was characterised by weak seasonal IT demand, higher oil prices, and appreciation of the Korean won, said Chu Woosik, senior vice president of Samsung's investor relations department, in a conference call.

Strong demand for flat-panel televisions led the company's display business sales to post a 34 per cent jump on the year. However, fierce competition in the market drove down prices, squeezing profits. Despite being responsible for about a fifth of the company's total sales during the quarter, only about five per cent of Samsung's total operating profit came from the LCD (liquid crystal display) business.

Samsung is the world's largest manufacturer of LCD panels and it has been investing aggressively in new factories to produce larger and cheaper panels. On Friday it announced plans to invest 1.8 trillion won in building a new LCD factory with Sony.

Chip sales remained Samsung's biggest business during the quarter. Demand for DRAM (dynamic RAM) chips for personal computers was strong while the NAND flash market was weak. Samsung's semiconductor business recorded sales of 4.4 trillion won during the quarter and operating profits of 1 trillion won.

"What we have achieved in Q2 was quite good but things look much more promising in Q3 and beyond. The worst is behind us we believe," Chu said.