Try the new FT.com

May 11, 2006 12:21 pm

Samsung sees flash chips shortage in H2

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Samsung Electronics, Asia’s most valuable technology company, on Thursday said that profitability would improve significantly in the second half, helped by higher demand and better pricing.

The upbeat guidance came after the Korean company last month said first-quarter operating profit dropped 25 per cent due to falling prices of its mainstay products - memory chips, mobile phones and flat screens.

Samsung forecast that the Nand flash memory market would see supply shortages in the second half as lower prices sparked more demand. It also expected flat screen prices to stabilise, helped by strong growth in LCD TV panels. Its handset sales were forecast to beat the 2006 target of 115m units.

The optimistic forecast has helped ease investor worries about the negative impact that Samsung’s $67m settlement over a chip price-fixing lawsuit would have on its earnings this year.

The world’s largest memory chipmaker said Thursday that it reached a settlement with small businesses and computer makers in the US, who claimed in 1999 that Samsung conspired with rivals to drive up D-ram prices. Infineon Technologies of Germany will pay $20.8m for the settlement, which has been approved by a US court.

Hynix Semiconductor, Samsung’s rival, said it also reached a $73m settlement for the class action lawsuit but it has yet to be approved by the court. The court is set to hold an approval hearing next week. Micron Technology of the US and Elpida Memory of Japan also face the same charges.

Memory chipmakers have seen profitability deteriorate this year as prices of Nand flash memory chips used in mobile digital gadgets dropped about 65 per cent amid a supply glut. But Samsung said on Thursday demand for the chips was improving, prompting it to raise the chip prices.

The company said it would see “marked improvements” in LCD margins in the second half as the market recovery accelerates and cost-reduction continues. It aims to become the world’s number one flat panel TV maker, overtaking Japan’s Sony.

Samsung is the world’s third-largest mobile phone handset maker, after Nokia and Motorola. It introduced more than 30 new handset models in the second quarter, which it hopes will drive sales and lift profit margins.

Samsung’s shares closed up 0.91 per cent at Won663,000 on Thursday and Hynix shares rose 0.78 per cent to Won32,250.

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

EMAIL BRIEFING

Sign up to #techFT, the FT's daily briefing on tech, media and telecoms.

Sign up now

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE