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Tue, Nov 14, 2006 - Page 10 News List

Samsung says Vista to spur chip orders

BULLISH The global chip giant expects Microsoft's software upgrade to stimulate average PC memory demand, easing concerns over a DRAM chip glut next year

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Samsung Electronics Co, the world's second-largest maker of semiconductors, forecast "very strong" first-quarter orders for computer memory chips, helped by demand spurred by Microsoft Corp's new Windows Vista operating system.

The Suwon, South Korea-based company is "bullish" on prospects next year given robust chip demand, Chu Woo-sik, head of investor relations at Samsung, said yesterday during a conference in Singapore.

Asia's largest mobile phone maker also said its first-quarter handset shipments will exceed those of the fourth quarter.

Microsoft's latest version of Windows, the first major upgrade since 2001, is being sold to corporate users this month and scheduled for general release in January after a two-year delay. Samsung and Hynix Semiconductor Inc, Asia's two largest computer memory chipmakers, last month raised their capital spending budgets for this year.

"It's worth watching out for the Vista effect," said Chun Seong-hoon, who helps manage about US$2 billion in equities at SH Asset Management Co in Seoul. "The outlook for chips and cellphones is good."

Shares of Samsung, which generated 68 percent of operating profit from semiconductors last year, climbed 1.6 percent to 639,000 won (US$683), while Hynix's stock advanced 2.6 percent to 35,100 won (US$37.59) in Seoul yesterday.

Shares of Taiwanese computer memory chipmakers including Nanya Technology Corp (南亞科技), Powerchip Semiconductor Corp (力晶半導體) and Inotera Memories Inc (華亞科技) also advanced in Taipei.

Samsung expects the average personal computer to have 1.2 gigabytes of memory next year, or 46 percent more than this year.

PC shipments will increase 13 percent next year, accelerating from 9 percent growth this year, according to estimates by Merrill Lynch & Co.

Samsung's forecast may help ease concerns that increasing production of dynamic random access memory (DRAM) chips will lead to a glut in the industry.

Samsung said last month that industry production of DRAM, measured in terms of storage capacity known as bits, will increase about 65 percent next year while the company plans to boost production by 90 percent.

Samsung said last month it increased this year's semiconductor capital spending budget by 5.2 percent to 6.66 trillion won (US$7.1 billion), the highest level among chipmakers worldwide.

Hynix, Asia's second-largest maker of computer memory, said last month it raised its spending plan by about 30 percent to US$3 billion.

Chu yesterday said that Samsung had decided to allocate some of next year's spending to this year, which will probably result in capital expenditure falling next year.

Global mobile phone shipments will rise next year by 10 percent or more, fueled by demand from emerging markets including India and Eastern Europe, Chu said.

Last week, Samsung forecast mobile phone industry shipments to exceed 1 billion units for the first time next year. Shipments by Samsung and its rivals will probably climb to 1.07 billion handsets next year, from 970 million units this year, Lee Ki-tae, president of Samsung's telecommunications division, said.

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