One of the biggest tech news this year is a sales launch on Jan. 30 of Microsoft’s Windows Vista operating system. And few other hardware manufacturers are expected to benefit more from the introduction of the new software than Korea’s Samsung Electronics. That’s because computers need bigger memory to run the sophisticated software and Samsung is the biggest maker of computer memory device called dynamic random access memory (DRAM) chips, accounting for nearly a third of the global DRAM market expected to total around $40 billion in 2007.
Already, Samsung has been enjoying a high profit margin from the sales of DRAM chips which has been in tight supply in recent months. Researcher IDC notes that DRAM chips were in short supply in 2006 partly due to a production shift by memory chip makers from DRAMs to NAND flash chips which store data even when power is switched off (NAND chips are used in such devices as digital music players, digital camera and mobile phones). “Windows Vista will be a shot in the arm for Samsung’s chip sales next year,” says Kim Soo Kyoum, semiconductor program director at IDC.
Merrill Lynch figures Vista will increase the use of DRAM chips to an average of 1.2 gigabyte per PC in 2007 from 0.8 gigabyte in 2006. This, coupled with an 11% increase in PC unit shipments, will help Samsung report an operating profit of $9.4 billion this year from an estimated $7.5 billion in 2006 (Samsung also sells other semiconductors, LCD panels, mobile phones, TVs and other home electronics, but DRAM is expected to represent 39% of its total profits). The brokerage house also expects Samsung to post a profit margin of 37% from its DRAM chip sales in 2007, against 35.8% in 2006.