Samsung is forecasting record sales of its mobile phone handsets

Operating profit for the three months to 30 September hit 1.85 trillion won ($1.8bn; £1bn), down from 2.13 trillion won in the same period of 2005.

However, the South Korean firm said it expected margins and sales to rise in the final three months of the year.

Samsung's upbeat outlook sent its shares up 1% on Seoul's KOSPI index.

Margins improving

The electronics giant is Asia's biggest manufacturer of mobile phones and computer chips.

Samsung said it expected a record sale of mobile phone handsets in the final quarter of 2006, following the launch of a new range of ultra-slim models which have been competing well with rival Motorola's Razr phones.

Although profit margins for many of its products were down on a year ago, they had been rising in recent months, the company added.

Net profits during the quarter beat forecasts with a 16% gain.

Samsung said a global shortage in DRAM computer chips had helped fuel profits in its memory chip division, where margins had jumped to nearly 30%.

"Our plan to invest an additional one trillion won to increase capacity of our memory-chip business is expected to create revenue opportunities next year," the company said.