Samsung Elec sees PC chip recovery, strong phone sales

Samsung's forecast is more bullish than that of market research firm iSuppli, which two weeks ago cut its rating on suppliers of DRAM and flash memory chips to "negative" from "neutral", citing a supply glut and a fall in prices.

ISuppli said market conditions should slowly improve during the next few quarters, with DRAM picking up more quickly than NAND. The researcher said earlier this month that the DRAM sector generated $7.96 billion in the third quarter, an 8 percent rise on the previous quarter.

Samsung Electronics shares closed 0.93 percent higher at 544,000 won, outperforming a 1.4 percent fall in the wider market.

Chu said the company did not intend to raise its capital expenditures in 2008, saying it was not intending to "flood" the market.

"Samsung not increasing capex is good news for the DRAM market," said Yoo Chang-eyun, an analyst at BNP Paribas, adding that the current oversupply had prompted many DRAM makers to accelerate the retirement of their 8-inch lines. "We don't need more capex right now" in DRAM, he said.

STRONG MOBILE PHONES, LCD

Samsung's Chu said the company expects to sell close to 50 million handsets in the fourth quarter, from a record 42.6 million in the third quarter.

Samsung, which said it was targeting both the higher end of the market and the lower-cost segment, said the global mobile phone industry would grow by 12 percent in 2008, reaching 1.28 billion units.

But Chu said higher marketing costs related to selling mobile phones could push fourth-quarter telecoms operating profit margin down by 2 to 3 percentage points from the third quarter's 12 percent margin.

Samsung's Chu said the company expected very strong growth in LCDs as customers buy more TVs to watch the 2008 Beijing Olympics.