Samsung Electric Sees 2008 DRAM Recovery

Samsung Electronics said on Wednesday the oversupply situation in computer chips was expected to ease in 2008, especially in the second half, but that fourth-quarter telecom profit would come in lower than in the third.

Samsung, the world's biggest maker of memory chips, made the prediction on dynamic random access memory (DRAM) chips at a technology forum.

"The visibility of the market is very low at this moment," said Chu Woo-sik, executive vice president in charge of investor relations.

He said Samsung was betting on non-memory semiconductors and on the printer market as its next growth engines.

Chu predicted the fourth-quarter telecoms operating profit margin could drop by 2 to 3 percentage points from the third quarter's 12 percent margin, citing higher marketing costs for handsets.

Chu nevertheless expressed faith in a recovery in the memory chip market, fueled by rising demand for NAND flash chips, commonly used in portable gadgets, which would in turn prompt manufacturers to switch more production from DRAM to NAND.

He also said the company was not planning to spend more in 2008 than in 2007.

As for other divisions, Chu said Samsung would sell close to 50 million handsets in the fourth quarter, from a record 42.6 million in the third quarter, and added it was aiming to sell 200 million units in 2008, up from about 160 million in 2007.

Samsung is hoping to reach an operating profit of about $20 billion on a consolidated basis by 2012, with revenue expected to reach $150 billion, Chu also said.

Samsung had previously predicted that it would post on a consolidated basis revenue of $100 billion in 2007.

In October, the company posted a flat third-quarter net profit as sluggish computer memory chip prices offset strong flat screens, and warned that the whole memory sector could see losses in the current quarter.