Samsung Electronics Co overtook Apple Inc as the world's top smartphone maker in the July-September period with a 44 percent jump in shipments, and forecast strong sales in the current quarter in a clear warning to its rivals.
Samsung only entered the smartphone market in earnest last year, but its sales have skyrocketed thanks to a sleek production system that rapidly brings new products to market. Apple introduced its first iPhone in 2007.
"In the handset division, Samsung has no real rival models to challenge its products except for the iPhone 4S. Apple and Samsung will continue to dominate the market in the fourth quarter," said Kim Hyun-joong, a fund manager at Midas Asset Management, which owns Samsung shares.
Profits from the South Korean firm's telecoms division, announced on Friday, more than doubled from a year ago to a record 2.5 trillion won (1.3 billion pounds) and accounted for 60 percent of Samsung's total profit, offsetting a plunge in earnings from its bread-and-butter memory chips.
Shipments of smartphones jumped 44 percent from the preceding quarter to 27.8 million units, up nearly four times from a year ago, according to research firm Strategy Analytics.
Apple's iPhone sales shrank by 16 percent to 17.1 million units in the third quarter. Samsung had 23.8 percent of the global smartphone market in the third quarter, 9 points higher than Apple. Samsung's flagship Galaxy line of products is powered by Google's (GOOG.O) Android software.
Apple sold fewer phones in the third quarter, missing street expectations for the first time in year, as customers held off buying iPhones until the October launch of the latest version.
Samsung shares were up 1.6 percent by 0500 GMT, versus a 0.6 per cent gain in the wider market .KS11.
The world's biggest technology firm by revenue reported a 4.25 trillion won operating profit for the July-September quarter, broadly in line with its earlier estimate of 4.2 trillion won.
That was down from 4.9 trillion won a year ago but up from 3.8 trillion won in the preceding quarter.
Samsung said its fourth-quarter earnings could be better than the third, boosted by one-off gains from its $1.4bn (£870.2) sale of its hard disk drive business to Seagate Technology.
"I am cautiously optimistic on the fourth quarter outlook at this point," Robert Yi, head of Samsung's investor relations, told analysts.