Samsung's smartphones keep it afloat -

The world's largest maker of memory chips and televisions, Samsung, has seen its profits fall by a quarter.

Samsung,  which is enduring a battle with former chum Apple and appears ready to lose its lucrative iPhone and iPad chips contract, is haemorraging cash on its flat screen business.

Samsung's new version of its flagship Galaxy S smartphone is doing rather well. It is expected to have become the world's top smartphone vendor in the second quarter, ending Nokia's 10-year reign at the top.

Its Galaxy S II has sold more than three million units since its debut in late April. Some analysts expect the phone, running on Android, to become Samsung's best-ever model with sales of 20 million units this year.

Samsung is expected to have sold 19 million smartphones in the second quarter in total and is expected to beat its 2011 smartphone sales target of 60 million units.

According to Reuters, if the outfit had not been making loads of dosh from its smartphone business, it would be in deep trouble.

Analysts think that it will be smartphones which will lead earnings recovery in the second half of this year.

Samsung estimates that its quarterly operating profit will be $3.5 billion, which is down by 26 percent a year ago, but up 25 percent from the preceding quarter.

Analysts believe the figures are not that bad considering. Chun Nam-Joong, fund manager at Consus Asset Management, told Reuters that the stock market may not view this as a negative signal.

However, the next quarter will be bleak. The LCD business is unlikely to swing to profit and the memory chip business may not grow as quickly. At the moment Apple is still providing the outfit with a big chunk of its business.

Samsung expected a 15 percent rise for DRAM chips used in computers, and an over 30 percent gain for NAND chips used in mobile phones. However, it now seems that this is unlikely.

Demand for personal computers is slowing and smartphone production was stuffed up by the Japanese earthquake in March.