Samsung poised for big Sony order

"If the details of the article are true, it's positive for Samsung's stock because they would be getting a big source of demand."

Chung Chang Won, Daewoo Securities analyst

Samsung Electronics Co, the world's second-largest maker of semiconductors, is in talks to increase sales of memory chips to Sony Corp, which uses them to store data in portable game machines.

Samsung said yesterday it is negotiating a contract to supply NAND flash memory chips to Sony. Suwon, South Korea-based Samsung made the statement in Seoul, confirming part of an earlier Korea Economic Daily report. The company didn't comment on other details of the article, which said Sony's order would account for about 20 percent of Samsung's NAND production.

The order from Tokyo-based Sony, the world's second-largest consumer electronics maker, may be worth about 1.8 trillion won (US$1.8 billion) should it account for one-fifth of Samsung's NAND production, exceeding the value of Samsung's sales to Apple Computer Inc, said Chung Chang Won, an analyst at Daewoo Securities Co.

"If the details of the article are true, it's positive for Samsung's stock because they would be getting a big source of demand," said Chung, who expects 9 trillion won in overall flash sales for Samsung next year, excluding the possible sales to Sony.

Samsung spokesman Ken Noh declined to comment beyond what the company said in today's regulatory filing in Seoul. Sony spokesman Yoshikazu Ochiai, who's based in Tokyo, declined to comment. James Kim, head of investor relations at Hynix Semiconductor Inc, the world's second-largest maker of memory chips, said that Hynix isn't currently negotiating any new order to sell NAND to Sony.

Shares of Samsung Electronics, the world's largest maker of NAND chips, rose 1.4 percent to close at a record 654,000 won.

The Korea Economic report, which cited an unidentified Samsung official, said that Sony would use the chips in its new MP3 music players that store at least 8 gigabytes worth of songs.

A contract will probably be signed during the first half of next year, according to the report.

Hwang Chang Gyu, head of Samsung's semiconductor business, last month said that the company was in talks to secure a NAND order bigger than the one it has with Apple, the world's largest maker of MP3 players. Samsung said in November it won US$500 million worth of NAND orders from Apple.

While Hwang declined to name the potential buyer in last month's press conference, he said he heard from Sony that the Japanese company expects to sell about 20 million PlayStation portable game machines next year. PlayStation portables use NAND flash memory to save data.