Updated: Samsung's profits drop, ICs down

SAN JOSE, Calif. — Citing a “challenging” period in the electronics industry, South Korea’s Samsung Electronics Co. Ltd. reported a net income of 1.88 trillion won ($1.95 billion) for the first quarter of 2006, down 27 percent from the previous quarter but up 26 percent from the like period a year ago.

Sales were 13.96 trillion won ($14.5 billion) in the quarter, down 10 percent from the previous quarter but up 1 percent from the year-ago period.

Semiconductor sales were 4.33 trillion won ($4.4 billion) for the quarter, down 15 percent over the previous quarter and down 3 percent from a year ago. Operating profits in its chip sector were 1.12 trillion won ($1.16 billion) for the period, down 31 percent sequentially and down 19 percent a year ago.

Memory chip sales fell 16 percent in the quarter, while system LSI revenues dropped 13 percent in the period.

DRAM bit-growth fell 2 percent in the quarter, while average selling prices (ASPs) dropped by 1 percent sequentially. NAND flash bit-growth jumped 17 percent, but ASPs fell 25 percent.

LCD sales fell 11 percent in the quarter, while profits dropped 73 percent sequentially. Samsung’s digital media and appliance businesses were in the red.

Meanwhile, Samsung forecasted its capital spending only for the overall semiconductor segment this year, which is set at 5.63 trillion won ($5.85 billion). And as for the LCD sector, it plans to spend 2.37 trillion won ($2.46 billion) for this year. The figures are exactly same with what it announced in January.

Still, Samsung said Thursday (April 13) that it plans to invest $220 million to add a new 300-mm line to its existing fab in Austin, Texas. Initial construction is set to begin later this year, the company said.

Samsung forecasted that its sales in the mobile phone sector would rise slightly due largely to expected brisk sales of high-end products such as 3G HSDPA-enabled and slim phone models.

As for the TFT-LCD sector, it predicted its sales of 40-inch, or larger, LCD TVs would reach 13.8 million units in the second quarter, up 12 percent sequentially. Sales of small and medium-size TVs would stand at 24.7 million units, up 16 percent.