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Memory demand driving expected Q3 Samsung profits

Samsung Electronics Co of South Korea expects third-quarter operating profit in its memory chip business to double or triple from the previous quarter, a company executive said yesterday.

"The market demand for memory chips is very strong," said Chu Woo-sik, chief of Samsung's investor relations team. "We keep raising our contract prices for both DRAM and NAND chips," he said, though declining to reveal specific price increases.

NAND flash memory chips are widely used in consumer electronic devices, such as MP3 players and digital cameras, while DRAM chips are used in personal computers.

Both Samsung and analysts have forecast stronger third-quarter results for the company on a quicker-than-expected rebound in DRAM prices and stabilizing prices of flash memory chips and liquid-crystal-displays.

Samsung, the world's largest maker of computer memory chips by revenue, posted an operating profit of 330 billion won (US$350.3 million) in its chip business in the second quarter, down 39 percent from the previous quarter and down 67 percent on year, due largely to a sharp decline in DRAM prices.

"We're witnessing a significant rise in NAND chip demand for new applications like high-end handsets and portable multimedia players," Chu said. "DRAM chips are also selling well amid the seasonal back-to-school demand for computers and other gadgets."

The company, South Korea's largest corporation, also forecast profit margins at its liquid crystal display division to rise from 9 percent in the second quarter to a percentage range in the mid-teens, Chu said.
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