The Wall Street Journal-20080115-Business Technology- Chip Woes Damp Samsung Profit- LG-Philips Gains
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Business Technology: Chip Woes Damp Samsung Profit; LG.Philips Gains
SEOUL, South Korea -- Samsung Electronics Co.'s fourth-quarter net profit slipped 6.8% as a cyclical downturn in memory chips cut into the strong improvements in other components and finished gadgets like television sets.
LG.Philips LCD Co., meanwhile, reported its largest quarterly profit ever, predicted strong earnings for this year and said it may issue a dividend to shareholders, a rare step for a high-tech manufacturer with volatile earnings.
Samsung's semiconductor division, usually its biggest source of profits, contributed less to the bottom line than its divisions that produce flat-panel screens and cellphones. Samsung executives said they expect chip profit to fall further during the first quarter and then start to recover. They expect the other businesses to follow seasonal patterns.
The company posted earnings of 2.21 trillion won ($2.36 billion) for the quarter ended December, down from 2.37 trillion a year earlier. Revenue was 17.48 trillion won, up 11% from 15.69 trillion won.
Samsung is the world's biggest maker of memory chips by revenue and, like others in the industry, has suffered as the new factory capacity that it and others built got ahead of demand.
LG.Philips, the world's second-largest maker of LCDs by revenue after Samsung, reported earnings of 760 billion won for the fourth quarter, compared with a year-earlier net loss of 174 billion won. Results were buoyed by demand for flat-panel TV sets and other gadgets, which caught up with the industry's supply of screens, and by reduced costs.
For this year, LG.Philips executives said profit will be supported by solid demand for LCDs in TV sets. In particular, the coming shift to digital broadcasting in the U.S. likely will lift sales, as households that receive analog broadcasts will need new equipment.
