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Samsung profit drops amid memory downturn

Posted: 29 Oct 2008     Print Version  Bookmark and Share

Keywords:memory downturn  chip sales  NAND flash  DRAM 

Hit hard by the memory downturn, Korea's Samsung Electronics Co. Ltd posted a profit of Rs.3,683.00 crore (1.22 trillion won) in the quarter, down 43 per cent from the previous period and down 44 per cent from a year ago.

Samsung said sales were Rs.58,064.32 crore (19.26 trillion won) in the quarter, up 6 per cent from the previous period and up 15 per cent from a year ago.

Its chip sales were Rs.14,623.61 crore (4.78 trillion won) in the quarter, up 4 per cent from the previous period and down 5 per cent from a year ago. Operating profit within the chip unit was Rs.724.30 crore (0.24 trillion won) in the quarter, down 12 per cent from the previous period and down 74 per cent from a year ago.

Memory sales were Rs.9,892.44 crore (3.03 trillion won) in the quarter, down 6 per cent from the previous period and down 15 per cent from a year ago.

The company claims its profitable in the memory business. But like all memory makers, Samsung is seeing a severe downturn in both NAND flash and DRAM. At present, NAND and DRAM are expected to remain weak for the remainder of 2008 and perhaps 2009.

''Commentary from Samsung on all business units (semiconductors, TFT-LCD, telecom, digital media) can be characterised as 'below-seasonal,' '' according to a report from FBR.

Behind the numbers
The memory sector was weak, especially DRAM. ''Samsung reported below-seasonal DRAM bit demand growth in 3Q08, a trend that is expected by Samsung to continue into 4Q08/1Q09,'' according to the report. ''The impact of below-seasonal bit demand has been to such a degree that, according to Samsung, even continued industry capex reductions have not yet had an impact.''

Going forward in the sector, ''Samsung expects DRAM bit capacity to increase by 40 per cent to 45 per cent in CY09, though Samsung is planning to outgrow the industry average by increasing bit capacity by 60 per cent to 65 per cent,'' according to the report.

''On the NAND side, although demand has been weak, and below-seasonal, Samsung indicated that supply and demand is in relatively better shape when compared to DRAM,'' according to the report.

Still, Samsung is in better shape than its rivals. ''We expect Samsung to continue to keep the pressure on memory competitors and, thus, we expect CY09 memory capex to decline by only 10 per cent to 15 per cent year-over-year, versus our estimated memory-industry capex decline of 25 per cent to 30 per cent.''

In TFT-LCDs, ''panel shipments have continued to decline (approximately 6 per cent quarter-over-quarter) due to inventory adjustments. And, although shipments are expected to increase by 10 per cent quarter-over-quarter in 4Q08, they are still well below historical averages,'' according to FBR. ''Nonetheless, Samsung remains on track to start installing equipment by mid CY09 for its second 8.5G line, which is a JV with Sony.''

-Mark LaPedus
EE Times





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