Samsung sees 2004 memory chip sales up a fifth
By Kim Miyoung, Reuters
SEOUL — Samsung Electronics said on Friday it aimed to lift memory chip sales by a fifth to $10 billion next year by focusing on output of flash memory used in cell phones and digital cameras.
The world's top memory chip maker is investing $2.87 billion this year to boost semiconductor output as it bets the battered technology sector will recover from its worst-ever slump in 2001.
"We see flash memory chips as a new growth driver and will further boost flash output to compensate for declining profitability of other memory chips such as DRAM," the South Korean company said in a statement.
Prices of flash chips have remained relatively stable compared with DRAM (dynamic random access memory) chips, as they are used in a wider range of electronics products. DRAM, the most common type of memory chip, tends to be confined to use in computers.
"It's a positive move given flash memory only takes up some 30% of Samsung's total memory chip sales," said Song Myong-sup, an analyst at Meritz Securities.
"But Samsung may not be able to reach that target should prices of flash memory chips go under pressure due to heavy increase in supply in the absence of strong demand for digital products."
Samsung said it would aim for a share of more than 21% of the world memory chip market, which it estimated would be worth $47 billion in 2004.
The firm declined to give an estimate of this year's memory chip sales, which accounted for 20% of its second-quarter sales revenue, but said it expected 2003 memory chip sales and profits to increase more than 20% from a year ago. Memory chip sales were 8.074 trillion won ($7.039 billion) in 2002.
Driven by the upbeat outlook and hopes for solid third-quarter earnings, Samsung shares jumped 3.85% to 445,000 won as investors scooped up more of what is already Asia's most valuable technology stock, with a market value of $61 billion.
Flash war
Flash chips are popular in digital cameras because they store and erase information quickly and do not require power to retain their data.
Samsung, the world's top maker of NAND-type flash memory chips with a 65% market share, expects the global flash chip market to also grow 20% to $12.6 billion next year.
Samsung produces the chips under a licensing agreement with Toshiba Corp, which invented NAND technology in 1987 as a possible replacement for hard disk drives.
The two companies control 95% of the $2.28 billion global NAND flash market, which has been an engine of growth in an industry still recovering from its slump in 2001.
Europe's top chip maker, STMicroelectronics, is trying to crash the party by teaming up with South Korea's Hynix Semiconductor Inc to develop and market NAND before the end of 2003.
Samsung said it expected the NAND flash market to grow 88% annually until 2007 and to boost its portion of the overall flash market to 66% in 2005 from 28% this year.
NAND competes with a different flash technology called NOR, which is dominated by Intel Corp and Advanced Micro Devices Inc, and is widely used in mobile phones and handheld computers.
Analysts expect NAND to overtake NOR in a few years because it is cheaper to produce per byte and can store more data. The two technologies take their names from the type of logic circuits they use to store data.
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