Samsung Expands To Meet DRAM Demand
(09/06/00, 8:21 a.m. ET)
By Reuters
SEOUL - Samsung Electronics, the world's largest memory chip maker, said on Wednesday it would invest $3.47 billion to expand output, and forecast sales of chips and flat screens to hit $30 billion by 2005.
"Samsung Electronics will maximise its competitiveness in the fields of memory, system LSI [large-scale integration] and TFT LCD and will attain $30 billion sales in 2005," company President and CEO Lee Yoon-woo told a news conference.
The firm said the money would be invested by the end of 2003 in building and operating three new fabrication operations (fabs) to meet growing demand in Korea and overseas.
"The mercurial growth of the Internet market and digital media products will lead to a shortage of DRAMs until the year 2002," Lee said.
Lee added that Samsung would build two fabs to make memory chips and one for non-memory chips, including system LSI and application-specific integrated circuit (ASIC) chips.
Lee said one of the new memory lines would be dedicated to the production of 12-inch wafers, instead of the eight-inch wafers the company now uses for producing memory chip products.
"Samsung was the first in the industry to operate a 300 mm [12 inch] wafer pilot line," Lee said. "The line will be operational from the second half of 2001."
Construction of a production line for system LSI non-memory semiconductors is to begin in October and aims to produce 30,000 eight-inch wafers a month.
Samsung said its sales in the non-memory sector would increase from this year's expected $1.7 billion to reach $3 billion in 2002 and $5 billion in 2005.
Lee said Samsung would also try to maintain its leading position in the TFT-LCD, or flat screen, market. Samsung products account for about 40 percent of the global flat screen market, the company said.
Analysts said Samsung's expansion of facilities had been expected but could accelerate an oversupply of chips by triggering competitors to follow suit.
"Samsung's move is likely to prompt its competitors to expand facilities in a bid to catch up with their rival," said Anci Choi, a senior fund manager at MyAsset Investment Management Co. in Seoul. "That could advance the business cycle to reach a point of oversupply, which bodes ill for Samsung and other chip makers."
Samsung, which closed at a six-month low at $231.81 on Tuesday, finished unchanged on Wednesday after hitting an intraday high of $238.13. Its shares had been pressured by foreign investors' heavy selling after analysts turned gloomy on the chip cycle.
But some analysts maintained buy recommendations for the Korean chipmaker.
"The price of DRAMs is forecast to firm up later this month due to seasonal factors and there's no problem with the fundamentals of Samsung," said Koo Hee-jin, a senior analyst at LG Investment and Securities.
Jay Kim at ING Baring agreed: "Samsung Electronics is definitely oversold considering its solid fundamentals."
He gave a 12-month target price of $405.90 to $451 for Samsung Electronics.
techweb.com
WHERE IS THE SO-CALLED OVERSUPPLY OF DRAM THAT KUMAR WAS SPEAKING OF? all the suppliers we checked continue to bemoan upcoming shortages. |
