Monday, 28 April 2008

Lag in Competition Contributes to Samsung Q1 Revenue

Samsung Electronics today announced revenues of 17.11 trillion Korean won (won) for the first quarter of 2008 ending March 31, 2008.

According to the electronics company, weak prices amid weak seasonality diminished its business unit’s overall results, contributing to lower revenue and profits compared with the fourth quarter of 2007.

However, at the same time, a reduction in marketing expenses and favorable currency exchange rates boosted first quarter results.

"Despite challenging external conditions including an economic slowdown in developed markets, a stagnant semiconductor market globally, and a surge in raw-material prices, Samsung demonstrated solid performance due to its competitive advantage in supply chain management (SCM) and it strategic positioning in emerging markets,” said Dr. Woosik Chu, executive vice president of investor relations.

“Other external factors such as the lagging performance of several competitors also helped our first quarter performance.”

The Telecommunication Business posted record-high quarterly revenues of 5.55 trillion won. Sales of handsets overall achieved similar volume as last quarter’s record of 46.3 million units sold, although handset markets globally contracted by about 13 percent. The LCD Business posted quarterly revenues of 4.34 trillion won on a parent basis.

Samsung said factors influencing sluggish demand for the industry overall included weak seasonality, oversupply of DRAM due to steady increases in 12” capacity, and over-emphasis on high-density products.

The Semiconductor Business anticipates that the stagnant memory market will continue throughout the second quarter, with limited opportunities for increased demand.

It expects PC demand to remain sluggish due to low seasonality while oversupply of DRAM may continue due to production increases by competitors and predicts the NAND flash market in particular may suffer if the global recession continues or worsens.

Despite current conditions of oversupply and ongoing price pressures, Samsung plans to invest more than 7.00 trillion won in DRAM and NAND capital expenditures to solidify its market leadership and enhance future competitiveness.