Chip stocks have gotten a recent boost after Advanced Micro Devices (AMD 31.22 +0.33) said it aims to supply a third of chip market by 2008, up from about 21%.
Kind of "childish" trying to find an exact cause/logic reason that does not exist
Certain headlines don't make it to the headlines of NASDAQ traded stocks
Reuters
Samsung says memory business recovering fast
Thursday June 1, 5:28 am ET
SEOUL (Reuters) - The semiconductor business of Samsung Electronics Co. Ltd. (KSE:005930.KS - News), the world's top maker of memory chips, is recovering quickly, with rising margins and falling inventories, the company said on Thursday.
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"Our memory business is recovering quite nicely, both in DRAM and NAND," Chu Woo-sik, Samsung's senior vice president for investor relations, told Reuters by telephone.
Chu's comments are another indication that the fortunes of DRAM chips, used in computers, and NAND flash chips, used in digital cameras and music players, may be improving after a rocky first quarter.
Booming demand for flash memory chips, used in products like Apple Computer Inc.'s (NasdaqNM:AAPL - News) iPod, led Samsung to a 40 percent jump in profits in the fourth quarter of 2005. But NAND chip prices tumbled during the first quarter as extra supplies poured in while consumer demand cooled off after the holiday season.
Last week, the head of Samsung's chip business had indicated that the unit had hit bottom in early May and that earnings should improve notably from the third quarter.
In mid May, Samsung raised prices of NAND chips by a "mid-single-digit" percent for the first time this year, after seeing chip prices tumble 25 percent in the first quarter.
On Thursday, Chu said profit margins in DRAM chips, used mainly in computers, were seen rising 3 percentage points in the second quarter from the first. Samsung posted a 26 percent profit margin in the memory unit for the first quarter, down from 31 percent a year earlier.
In an earlier interview with Reuters, Chu had attributed improved demand for DRAM chips to a quicker transition to DDR2, which is a newer, faster chip.
On NAND, Chu said the market for flash cards was strengthening "very fast," with inventories coming back down to a normal level of seven to eight weeks, compared with the 10 weeks in the first quarter.
Looking forward, Chu said Samsung was in talks with "several" makers of MP3 music players looking to offer video capabilities by using high-end 8-gigabyte flash chips. The products are likely to be launched in the third quarter, he said.
Chu also said Samsung was in negotiations to provide handset makers with 1 GB to 4 GB chips, for music phones that will be offered from the third quarter.
Shares in Samsung, the country's biggest stock with a market value of $106.6 billion, were down 0.33 percent at 610,000 won at 0300 GMT, similar to the main index's (KSE:^KS11 - News) 0.33 percent drop. |
