Profits dive at chipmaker Samsung

Semiconductor prices have fallen 90% over the year

The world's largest computer chip maker, Samsung Electronics, has reported a 75% profits fall, amid a slump in global demand for semiconductors.

The South Korean firm saw net profit fall to 420bn won (£225m; $323m) in the July to September quarter, from 1,700bn won in the three months before.

Nonetheless, the results were more upbeat than those recently reported by industry peers Hynix Semiconductor and Micron Technology.

Like Hynix and Micron, Samsung has been hurt by a 90% fall in prices for 64-megabit dynamic random access memory (DRAM) chips, used mainly for memory in PCs.

Samsung's four major business areas are: chips; telecommunications; home appliances; and digital media, which includes PC peripherals and DVDs.

Not all bad

Quarterly sales fell to 7,230bn won from 8,800bn won in the same period last year, with semiconductor sales down 36% from the previous quarter.

"A prolonged slump will weed out weaker chip producers and accelerate industry restructuring, which will prove positive for Samsung Electronics eventually," said Hanhwa Securities analyst Lee Seong-Jae.

"Without cutting chip output, the company is trying to further expand its market share, while waiting for weak prices to force some other rivals to go out of business," added Mirae Asset Securities analyst Kim Kyung-Mo.

Samsung said its third quarter profit was helped by good performance in information-telecoms operations, which posted a 16% rise in operating profits on the three months before.

But its digital media and home appliance recorded both reported sharp falls in operating profits.

Samsung Electronics shares fell 1.5% before recovering to closed down 550 won, or 0.22%, at 169,500 won on Monday.