Page last updated at 07:20 GMT, Friday, 23 January 2009

Samsung loss adds economic gloom

Samsung at electronics fair, Nevada USA Jan 09
South Korea's largest company and the world's biggest chip-maker has been hit

Samsung Electronics, the world's biggest chip-maker, has recorded its first ever quarterly loss.

Prices of the South Korean firm's core products - memory chips and liquid crystal displays (LCDs) - have plunged alongside global demand.

Samsung's loss follows a profit warning from Japan's electronics giant Sony and other tech firms Microsoft and Nokia.

On the last day of trading before many Asian countries close for the Chinese New Year, markets slid downwards.

The Nikkei 225 closed down 306.49 points, or 3.8%, at 7,745.25, its lowest close since 20 November.

Samsung slips

Samsung on Friday posted an October-December net loss of 22.2bn won ($16.2m; 11.6m), compared with profits of 2.21 trillion won a year ago.

The losses are the first since it started to report quarterly figures in 2000.

Sales actually rose slightly, but margins on products such as plasma displays and mobile phones have been falling.

"The global economic slowdown had an adverse effect on consumer purchases of electronics goods in the fourth quarter, traditionally a strong period for electronics companies," Samsung said in a statement.

Samsung accounts for about 20% of South Korea's annual exports - it is the world's largest manufacturer of flat screen televisions, memory chips and liquid crystal displays; it ranks second in mobile phones after Nokia.

It employs 150,000 people in 62 countries and is engaged in a huge reshuffle of top executives.

It forecast slow progress in the semiconductor and display sectors as spending contracts worldwide, but expects its telecoms business to perform strongly.

Chill winds

Shenzhen port, south China. File photo
Global appetite for China's exports is drying up

The gloomy corporate news came a day after China announced its lowest rate of growth in seven years.

South Korea said its economy shrank by 3.4% at year's end, while Japan reported exports plummeted a record 35% last month and Japan's central bank predicted at least two years of contraction ahead.

Singapore unveiled a $13.7bn (9.9bn) "resilience package" on Thursday to provide a welfare net for residents, sustain employment and help the country cope with an expected 5% contraction in its economy.

Malaysia also said it would ban the hiring of foreign workers, to support its own people in work.

Sony said it expected to make an annual operating loss of nearly $3bn, its first deficit for 14 years, thanks to a sharp increase in the value of the yen and weak sales.

The US Treasury secretary-designate Tim Geithner's comments, describing China as a "currency manipulator" will add to a sense of economic chill in the region, analysts said.

Chinese 'manipulation'

"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency," Mr Geithner said in written testimony to senators.

Mr Obama has pledged to "use aggressively all the diplomatic avenues open to him to seek change in China's currency practices," Mr Geithner said.

China gave a low-key response, with an official saying merely that the remarks had been noted.

US economists complain that China undervalues the yuan in order to make its exports competitive.

China has overtaken Japan as America's biggest foreign creditor, and as of October 2008 held $652.9bn in US Treasury bonds, according to the latest Treasury Department figures.

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