Samsung: Chips biz down in 2007, LSIs and LCDs strong, 2008 capex roughly flat

Jan. 17, 2008 – The weak memory market continued to weigh on Samsung’s bottom line in 4Q, with sales declines in its semiconductor business and plunging profits, and oversupplies and price pressures are seen continuing through 1H08.

Samsung said 4Q total semiconductor sales were 4.91T won ($5.19B), down 2% Q-Q and 9% Y-Y. Operating profits continued to sink, down to 430B won ($454.4M), -53% Q-Q and -74% Y-Y. By segment, memory sales were down 9% Q-Q and 23% Y-Y to 3.24T won ($3.42B). The company said it “significantly” increased its product mix of 68nm DRAM and 51nm NAND flash chips, which it says provides better cost competitiveness. Bit growth was strong for both DRAM (17% QQ) and NAND (44%), and both types of devices enjoyed “strong seasonal demand.” Nevertheless, Samsung said it thinks oversupplies and price pressures will continue through 1H08.

The company’s system LSI segment, meanwhile, enjoyed 21%Q-Q/48%Y-Y revenue growth in 4Q (900B won, $951M) and 29% Q-Q/21% Y-Y sales for FY07 (2.85T won, $3.01B), on demand for display driver ICs and CMOS image sensors.

in its 4Q07/FY07 presentation, Samsung provided guidance for 2008 capital expenditures, suggesting it will increase consolidated memory capex by about 1.3% to 7T won (~$7.4B), vs. about 6.91T won ($7.3B) in 2007. Total group capex will be “over 11T won” ($11.6B), with a big spike (131%) in LCD capex to 3.7T won ($3.9B)


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