Reuters
Samsung says DRAM demand for Q1 2007 "very strong"
Monday November 13, 5:08 am ET
By Jean Yoon and Jennifer Tan
SINGAPORE (Reuters) - Samsung Electronics Co. Ltd. (KSE:005930.KS - News) forecast "very strong" demand for computer memory chips for the first quarter of 2007, thanks to the much-awaited January launch of Microsoft's new Vista operating system.
Chu Woo-Sik, senior vice president of investor relations, said Samsung would sell more mobile phones in January-March than in the current quarter, and its LCD business was performing better than expected in the current quarter.
The world's top memory chip maker and biggest maker of large liquid crystal displays (LCD) so far this year also said it was considering an additional eighth-generation LCD line.
"Our DRAM (dynamic random access memory) orders for Q1 are very strong, considering the seasonality aspect. We have most of the orders for Q1 as PC OEMs (original equipment makers) are ordering to be Vista-ready," Chu told the Samsung Tech Forum 2006 in Singapore.
Samsung, the world's third-largest handset maker after Nokia (NOK1V.HE) and Motorola (NYSE:MOT - News), sold a record 30.7 million phones in the July-September third quarter and has said it expects to beat that in the fourth quarter.
For 2007, Chu said the company expected to beat global handset sales growth, which it projected at 10 percent. But he said fourth-quarter handset profit margins would fall from the third quarter due to marketing costs.
Samsung's handset division had an 11 percent profit margin in the third quarter versus 9.5 percent in the second quarter.
"Samsung traditionally suffers from high marketing costs in the fourth quarter as they clear out inventory. Profit margin in handsets should come in at 10 percent in the fourth quarter and 11 percent in the first (quarter of 2007)," said An Sung-ho, analyst at Hannuri Securities in Seoul.
Samsung's mobile business is recovering from a difficult first half -- during which it was hurt by the runaway success of Motorola's clamshell RAZR phone -- with the success of a new series of ultra-sleek phones launched over the summer.
Song Myung-sup, analyst at CJ Investment & Securities, said he expected Samsung to sell just over 31 million phones in the fourth quarter and 33 million in the first quarter of 2007.
Samsung shares rose 1.6 percent on Monday in a flat market (KSE:^KS11 - News) as its comments fueled optimism on sector earnings.
Chu said half the demand for Samsung's handsets would come from emerging markets next year. "We see a big surge from Eastern Europe and India," he added.
NAND "NOT BAD"
He said demand and prices for DRAM chips, used mostly in personal computers, were strong in the fourth quarter and saw the market for NAND flash memory chips, popular in digital cameras, stabilizing as well.
"Overall demand is expected to be pretty strong for NAND flash next year," Chu said, adding that demand would be supported by new applications such as music cellphones, car navigation systems and portable media players.
Chip and PC makers have been eagerly awaiting the release of Microsoft's (NASDAQ:MSFT - News) Vista operating system as consumers have been delaying the purchase of new PCs for the same reason.
"For a while, there were oversupply fears about DRAM for the first half of 2007, but it seems manufacturers are fairly confident demand will remain sufficient," said CJ's Song.
In DRAM, Samsung competes with Germany's Qimonda (XETRA:QI1AY.DE - News; NYSE:QI - News) and South Korea's Hynix Semiconductor (KSE:000660.KS - News), while in NAND, it competes with Japan's Toshiba (Tokyo:6502.T - News) and Hynix.
LCD SHORTAGE POSSIBLE
On LCDs, Chu said the fourth quarter was shaping up to be better than anticipated, thanks to cost cuts and a recovery on the monitor display side.
"In the second half of 2007, there could be a shortage of LCD panels on the TV side," as the LCD industry delays fresh investment in the wake of price falls, Chu said.
Jun H. Souk, executive vice president of LCD R&D center, told reporters Samsung was mulling an additional 8G LCD line but had not decided whether it would be built with Japan's Sony (Tokyo:6758.T - News). A Sony spokeswoman declined comment on the matter.
The 8G line will use bigger glass panels, enabling makers to produce more LCD panels and boost efficiency. Eighth-generation mother-glass substrates yield eight 46-inch TV panels or six 52-inch panels, versus six 46-inch panels from 7th-generation glass.
David Steel, vice president of marketing at Samsung's digital media division, told reporters he expected global sales for LCD TVs to rise to 66 million units in 2007 from an estimated 42 million this year, while plasma display TVs would increase to 13 million from 10 million.
(http://biz.yahoo.com/rb/061113/samsung.html?.v=3 |
