SAN JOSE, Calif. - Amid a slowdown in DRAM, Samsung Electronics Co. Ltd. is reducing its capital spending by 14 percent for 2011.
This week, Samsung tipped its capital spending plans. As reported, Samsung provided its capex forecasts for 2011, including 10.3 trillion won ($9.2 billion) for the semiconductors, 5.4 trillion won ($4.8 billion) for LCDs, and 5.4 trillion won for OLEDs.
''The overall 2010 semi budget (for Samsung) exceeded expectations, driving our overall industry calendar 2010 capex to +108 percent year-over-over,'' said C.J. Muse, an analyst with Barclays Capital, in a report. ''And although Samsung's calendar 2011 capex appears to be down 14 percent year-over-year to 10.3 trillion won verses our estimate of 10.7 trillion won ($9.5 bilion), the strengthening won should enable the $-based decline to be lower. This in turn suggests the calendar industry capex should be flattish year-over-year, though we would note that Samsung's propensity to outspend its target every year in recent history leaves our outlook for +5-10 percent industry capex outlook intact.''
Samsung, however, is cutting DRAM spending. ''It appears that Samsung has pulled in some of its memory spending. This coupled with a potential slowdown in DRAM spending (we believe NAND spending is on track to grow) contributed to the guided 37 percent year-over-year decline in calendar 2011 memory spending to 6.3 trillion won ($5.6 billion). We had estimated 8.5 trillion won ($7.6 billion),'' Muse said.
On the other hand, foundry spending is up. ''On the flip side, management guided to a substantial ramp in calendar 2011 foundry capex to 4 trillion won ($3.6 billion) from 2 trillion won ($1.8 billion) in calendar 2010,'' he said.
LCD spending is down. ''Samsung's calendar 2010 spending in LCD of 4 trillion won fell below management's prior guide of 5 trillion won ($4.4 billion). However, having secured approval for their China LCD fab, management's outlook for 5.4 trillion won capex in calendar 2011 exceeded our expectations of 3.8 trillion won ($3.4 billion), highlighting the importance of the China market for the top tier panel makers,'' he said. ''We anticipate the majority of 2011 spending to flow to the China fab, with perhaps a third of the budget targeting Gen 8-2 fab expansion.''
In total, Muse's total 2011 LCD capex estimate is up, from minus 15 percent to the current minus 4 percent.