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Samsung Predicts Boom for Flash Chips

The Korean electronics giant predicted that the oversupply of memory chips will ease in 2008 as growing demand for portable gadgets prompts a shift in production to flash chips

South Korea's Samsung predicted that the oversupply of memory chips used in PCs is expected to ease in 2008 as growing demand for portable gadgets prompts a shift in production to flash chips, a Reuters report said.

The Reuters report said Samsung, which trails Finland's Nokia in mobile phones and jumped ahead of US rival Motorola this year, gave ambitious guidance on the business, forecasting it would sell 25% more phones next year compared with this year.

In October, Samsung posted a flat third-quarter net profit as sluggish computer memory chip prices offset strong flat screens, and had warned that the whole memory sector could see losses in this quarter, a Reuters report said.

Although the market for dynamic random access memory chips was still tough, rising demand for NAND-type flash chips used in portable gadgets, such as Apple's iPhone, means manufacturers will switch more production from DRAM to NAND, easing DRAM supply, according to Chu Woo-sik, EVP in charge of investor relations.

"The market is very difficult for DRAM," he said at a technology forum organized by Samsung.

Chu added that the company expects to sell close to 50 million handsets in the fourth quarter, from a record 42.6 million in the third quarter.

Samsung, which said it was targeting both the higher end of the market and the lower-cost segment, said the global mobile phone industry would grow by 12% in 2008, reaching 1.28 billion units.

The Reuters report further quoted Chu sa saying that higher marketing costs related to selling mobile phones could push fourth-quarter telecoms operating profit margin down by 2 percentage to 3 percentage points from the third quarter's 12% margin.

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