Samsung Electronics, the world's second-largest chip maker and a key supplier of flash memory for digital music players such as the iPod, expects its chip revenue for the first three months of the year to match that of the fourth quarter last year, but it won't be as profitable, an executive said Tuesday.
Chips account for about a third of Samsung's overall revenue, and the statement indicates that revenue will be strong, since business typically declines slightly in the first quarter compared to the fourth quarter, when holiday sales of tech gadgets boost business performance. The company's chip revenue reached 5.09 trillion Korean won ($5.44 billion) during the October to December period last year.
But Samsung's first quarter operating profit at its chip division will come in lower than the fourth quarter, said Hwang Chang-Gyu, president and chief executive officer (CEO) of Samsung's semiconductor division. He blamed the shortfall on lower prices for flash memory chips, which are mainly used to store data in MP3 music players and digital cameras.
Falling prices for flash memory chips is good for users because it often means companies will either offer more storage capacity in digital music players or lower prices, since their costs are dropping. But memory chip bargains might not last. Hwang expects demand to exceed supply in the second half of the year.
Overall growth in mobile devices and the spread of flash memory chips will also likely mean commodity memory chips, such as DRAM (dynamic RAM) and flash, will leave their volatile pricing history behind and remain on a steady track in coming years, said Hwang.
"We think the memory market will continue to grow at a steady pace," said Hwang. If growth continues this would ensure more stable pricing.
Samsung also said it expects to maintain over a 50 per cent share of the market for NAND flash memory this year, despite the rise of new competitors. The company's market share was over 53 per cent last year, but declined by more than 5 per cent year on year as new rivals joined the industry, according to market researcher iSuppli.
The company also believes it can add to its share of the market for DRAM computer memory chips, even as it maintains strong output of flash memory chips. Samsung, the world's biggest DRAM maker, expects to grab a 33 per cent share of the global DRAM market this year, up from 32 per cent last year.