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Samsung's chip division posts narrowed loss for 4Q

Posted: 18 Jan 2002 ?? ?Print Version ?Bookmark and Share

Keywords:samsung electronics? dram? consumer electronic? memory? transistor lcd?

Samsung Electronics Co. Ltd. said Jan. 16 that it had narrowed losses in its chip division in the fourth quarter, helped by a late-year rally in DRAM prices.

The company lost $161 million in its semiconductor division, which siphoned profits from its better-performing telecommunications and digital media divisions. But that loss was still an improvement over the $290 million lost in the previous quarter. Including all divisions, profit slid 55 percent from a year earlier at the South Korean electronics maker.

The damage could have been worse if not for the stronger results posted by the mobile-handset and consumer electronics businesses. Samsung earned $307 million last quarter, down 5 percent from the quarter before and 63 percent from a year earlier. Samsung's overall operations ended the year in the black, generating $2.2 billion in profit, down from $5 billion in 2000.

The company's semiconductor division, which includes sales of memory chips, thin-film-transistor LCDs and system logic, is expected to return to profitability this quarter as DRAM prices stabilize. Competitors Micron Technology Inc. and Infineon Technologies AG are expected to follow suit, and even beleaguered Hynix Semiconductor Inc. is expected to post an operating profit. Some of the smaller DRAM players will benefit, too, such as Taiwan-based Nanya Technologies and Powerchip Semiconductor Corp., analysts said.

The strongest gains in Samsung's semiconductor division came from memory chips, as the price for 128-Mbit DRAM surged from less than 90 cents in November to more than $2.50 toward the end of December. In the past month, spot prices have risen nearly 100 percent, prompting most of the top players to renegotiate contract prices. Samsung expects overall sales to increase 30 percent this year.

But there is lingering doubt about the sustainability of current DRAM pricing, even though for most manufacturers it is only hovering around the break-even point. Samsung officials said they expect prices to remain around current levels through the next few months.

Samsung also said it will cut its capital expenditures this year to $2.2 billion from $3 billion in 2001.

Mike Clendenin

EE Times

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