Wed, Sep 08, 2010 - Page 12 News List

Chipmakers set to face oversupply in Q4: Samsung


Samsung Electronics Co, the world’s biggest memory chipmaker, expects an oversupply of computer memory chips from in the next quarter if weakness in the PC sector drags on, a company executive said yesterday.

Kwon Oh-hyun, president of Samsung’s semiconductor business division, told a media briefing in Taipei the “PC market is slower, but other areas like servers and smartphones are becoming very hot.”

“If the PC industry continues to slow down, we may expect oversupply in the fourth quarter and the first quarter of next year,” Kwon said, stressing that Samsung would outgrow rivals because of a better product portfolio.

A supply glut would be more likely if Samsung’s competitors increase output by migrating to 50-nanometer or 40-nanometer technologies, Kwon said.

Shipments this quarter would be larger than last quarter, Kwon said.

Samsung kept capital spending for the semiconductor business at US$10 billion for this year and did not have a final decision about next year’s spending, Kwon said.

The company’s chief executive Choi Gee-sung said earlier this week that Samsung would spend 30 trillion won (US$25.5 billion) on equipment for the firm and its subsidiaries next year.

Joyce Yang (楊雅欣), a senior memory industry analyst with TrendForce Technology Corp (集邦科技), said: “There will almost certainly be a fourth quarter supply glut.”

“Most major players have new output coming out at a time when demand starts to dip,” she said.

Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chipmaker, is relatively optimistic for the next quarter.

“We expect PC demand to recover a bit in October. The fourth quarter will not be as bad as [some people] think,” said company spokesman Pai Pei-lin (白培霖), adding that the price decline would not be as drastic as in the past two years.

“We are seeing PC makers increasing PC memory installation, which will spur DRAM demand and digest some capacity,” Pai said, adding that this could offset some of the slower-than-expected notebook computer shipments in the second half of the year.

The PC industry’s ups-and-downs would have a smaller impact on Nanya Technology’s profitability as the chipmaker generated revenues from non-PC areas including memory chips for servers and consumer electronics such as set-top boxes and TVs.

Separately, Samsung’s semiconductor business chief said the chipmaker was a late entrant in the contract chip business and it was scheduled to produce chips on 32-nanometer technology for customers next year and would start developing 28-nanometer technology then as well.

Taiwan Semiconductor Manufacturing Co (台積電), the world’s top contract chipmaker, is taking the lead as it expects to start commercial production of its 28-nanometer technology early next year.

Samsung, which entered the contract chip market in 2005, is investing US$3 billion to construct a new production line in Austin, Texas, to make logic chips and memory chips on 40-nanometer and more advanced technologies. The construction is to be completed by the end of next year.

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