Samsung Electronics Co. , Asia’s biggest maker of semiconductors, flat screens and mobile phones, said third-quarter profit increased 17 percent to a record, driven by gains in sales of computer-memory chips.
Samsung Electronics Co., the world’s biggest maker of televisions, memory chips and flat screens, forecast weaker fourth-quarter earnings because of falling prices and the strengthening South Korean won.
Oversupply of computer-memory chips and the drop in liquid- crystal display prices will persist, the Suwon-based company said in a statement. Samsung, which today reported record third- quarter profit, also said it anticipates “severe” competition in TV prices during the year-end season.
Samsung led technology-related stocks lower in Asian trading as the projections fueled concern the earnings recovery by the region’s export-driven companies is losing steam. Government reports today showed South Korean industrial production slowed and Japanese consumer prices fell, signaling weaker economic growth.
“The post-recession inventory restocking has been done already, and demand was actually much weaker than people thought in the middle of this year," said Peter Yu, a Seoul-based analyst at BNP Paribas Asia. "A lot of people including Samsung were caught by this discrepancy.”
Recovery in demand for electronics, which has been “abnormal” this year depends on a turnaround in the global economy, making it hard to predict when spending will increase, he said.
"We expect increased oversupply and price declines in the memory market, as well we possible further declines in LCD panels," Robert Yi, vice president of investor relations, said on a conference call today. "Combining these with a possible appreciation of the won, we expect the overall fourth-quarter business conditions to be difficult."
Stronger Won
The won has gained 5.1 percent against the dollar in the past two months, making it the second-best-performing major Asian currency against the greenback during the period, according to data compiled by Bloomberg.
Samsung fell 2.1 percent to 748,000 won at 1:08 p.m. in Seoul trading, leading a 0.7 percent drop among information- technology stocks on the MSCI Asia Pacific index.
Prices of chips known as dynamic random access memory, which allow computers to run multiple programs simultaneously, will probably fall because of an industry glut and weak personal-computer demand, the company said. Samsung, the world’s second-largest chipmaker after Intel Corp., today reported semiconductor profits tripled in the third quarter.
The comments echoed those of its nearest competitor, Hynix Semiconductor Inc., whose chief financial officer said yesterday that DRAM prices will probably fall 20 percent to 25 percent sequentially this quarter.
Weak LCD Demand
Elpida Memory Inc., the world’s third-largest maker of computer-memory chips, will probably miss previous earnings projections as slowing personal-computer demand drives down chip prices, President Yukio Sakamoto said on Oct. 5
In LCDs, Samsung said the company will focus on producing more profitable panels, such as those used in LED and 3-D TV sets, as overall demand remains weak. LG Display Co., the second-largest LCD maker after Samsung, said this month it expects the display industry to turn around in the first quarter of next year.
Samsung, which competes against Sony Corp. and Panasonic Corp. in the TV market, forecast “severe” price competition in the industry after its digital-media division that assembles TVs posted a loss of about 230 billion won ($205 million).
Tokyo- based Sony and Osaka-based Panasonic report earnings today.In telecommunications, Samsung said it plans to keep profit margins above 10 percent and focus on expanding its smartphone business after launching the Galaxy S to challenge Apple Inc.’s iPhone. Samsung has sold 5 million units of the handset and aims to sell another 5 million during the rest of the year.
Profit at the mobile-phone division increased almost 20 percent to 1.13 trillion won in the third quarter after Samsung sold 71.4 million handsets, an increase of 19 percent.Overall third-quarter net income climbed 17 percent to a record 4.46 trillion won, in line with the average of 10 analyst estimates compiled by Bloomberg.
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