The world's top memory chipmaker, Samsung Electronics Co, said yesterday strong chip prices will give a big boost to profits, which analysts said could reach nearly US$2.5 billion in 1999.
"The 64-megabit DRAM price rose across US$10 yesterday on the spot market and [the strong price] would give a considerable boost to our profit for the coming period," Samsung spokesman James Chung told Reuters. The 64-megabit dynamic random access memory chips are the current mainstay in the world market and the biggest contributor to the South Korean company's business.
Analysts said the current price, compared with around US$8 early this year and a low of US$5.6 for the year, was attributable to the July 29 blackout in Taiwan and a "free PC" boom in the personal computer industry.
"The Taiwan blackout has reduced the world DRAM supply by some two percent, which was an important factor in the DRAM industry which is sensitive to supply and demand situation," said Shim Yong-jae, an analyst at SG Securities.
Taiwan's key industries were temporarily paralyzed in late July by a power blackout and damage inflicted on semiconductor and other electronics makers has been estimated at more than US$62 million.
Analysts said the chip price strength could also be attributable to increasing demand for personal computers under the spreading "free PC" marketing strategy of providing free PCs to people who sign up for Internet access.
"At first we thought the price rise was due to a temporary shortage in supply resulting from a blackout in Taiwan and from a temporary fall in yield due to attempts by makers to introduce new shrinkage technology," Samsung's Chung said.
But the price strength proved to be more cyclical and the upbeat trend is now expected to hold on for the time being, he said."In terms of annual profit, a US$1 rise in the price usually raises our profit by about US$300 million," he said.
But he declined to give a forecast for the company's profit. He had earlier said the company's after-tax profit for calendar 1999 was expected to top 2.7 trillion won (US$2.3 billion), compared with 313.2 billion won in profit for 1998.
Analysts said they were upgrading their earnings forecasts for Samsung Electronics to somewhere near 3 trillion won.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
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