By Kim Yoo-chul
Staff Reporter
Korean consumer electronics makers expect it will be up to three years before a turnaround occurs.
"Although profits will bounce back slightly in 2010, they will not approach 2007 levels until 2011," a Samsung Electronics spokesman said, Tuesday. "In line with the bleak outlook, we are now forecasting stalled growth next year."
The bleak outlook comes at a time when Samsung and LG Electronics have recently cut their 2009 sales projections.
Samsung, the world's No. 2 handset maker after Nokia, lowered next year's sales target to some 222 million, down from an initial 240 million. LG's target revised down to 105 million from the previously set 119 million, according to industry sources and company officials.
Samsung is forecast to sell 201 million, while LG is expected to sell 101 million this year, according to sources.
"The global mobile phone market will be stalled to just single-digit growth rates. We are still engaged in deep internal talks to fix next year's target," the official said. An LG spokesman also said his company hasn't finalized its 2009 target yet.
Leading research firms have echoed such negative outlooks, as the demand for consumer electronics gadgets is rapidly deteriorating, making them unexpectedly busy slashing their projections.
"Although the central bank has cut its key interest rates, no immediate benefits are expected," Kim Ik-sang, an analyst from Hi Investment Securities, said in a note to clients. "Any turnaround will come in the third quarter of next year at the earliest."
A protracted slump is also forecast for the semiconductor industry.
"The price for computer chips may stabilize from the second quarter next year," said Roh Keun-chang, an analyst at Korea Investment & Securities.
Roh said ongoing production cuts and reduced investment by chipmakers will help Samsung strengthen its current leadership.
"We are still maintaining a 'buy' position for Samsung," he said. "We're at 'neutral' for Hynix Semiconductor."
"We are setting up a contingency plan to prepare for a protracted slump in the chip industry," spokesman Park Hyun said, adding that selling its properties is one option.
The flat screen segment, meanwhile, is already in a rough patch.
As consumers hold off purchases of non-essentials like pricey LCD TVs, Samsung has been cutting its production of LCD panels by 5 percent from August.
"The production cut can be expanded, depending on market situation," Samsung's LCD business chief Lee Sang-wan said recently.
Samsung is also putting on hold its plan to expand LCD production at its Hungary plant, while lowering sales targets in the Southeast Asian region, including the Philippines.
LG Display has not decided on investing in the next-generation display business.