By Kim Yoo-chul
Staff Reporter
Shares of Samsung Electronics posted a modest rebound over the last couple of days after recent weakness, but are unlikely to sustain a strong rebound on generally weak sentiment in the chip industry, brokerages said.
Any meaningful rebound will be possible in the second quarter of next year when its earnings will turn stronger on improving chip and other key operations.
Samsung Electronics closed up 3.34 percent at 557,000 won yesterday, while Hynix Semiconductor closed unchanged at 22,700 won.
Research houses said that Samsung will be able to do more than offset falling chip prices by stronger productivity, with an increase of the proportion of profitable larger chips over 1-gigabit using 68-nanometer technology, further raising the profitability.
A brighter outlook for the global LCD TV industry, stemming from supply and demand imbalance and handsets sector will add additional momentum to its sharers, which have slumped near 20 percent over the past few months.
``We revised up our rating to `overweight’ as the company will benefit from its technology competence by having increased the proportion the profitable dynamic random access (DRAM) chips,’’ Hyundai Securities said in a research note.
It said the slight rebound of its shares since November is a reflection of such a merit.
The world’s largest memory maker will increase the portion of over the 1-gigabit high-end chips to 40 percent of the total sales by the end of the year.
Daewoo Securities said the global memory chip industry will turn around from the second quarter of next year after hitting a bottom in the first quarter.
``The global memory chip industry will turn bullish, centering on NAND flash sector from the second half of 2008,’’ the brokerage added.
On Thursday, Samsung said it plans to mass-produce NAND flash memory chips using advanced 50-nanometer level process technology at its U.S. chip plant from December.
The new line will mostly produce 16-gigabit NAND flash chips amounting to 20,000 wafers a month. The amount will be raised to 60,000 a month by 2008, according to the company.
The chips are commonly used in digital cameras and other portable electronic gadgets such as MP3 players.
According to iSuppli, a market research firm, Samsung’s sales of DRAMs and NAND flash chips will amount to $2.3 billion and $1.7 billion, respectively, in the fourth quarter, while the runner-up Hynix Semiconductor in computer-chip sector would post $1.7 billion in sales of DRAMs during the same period.
Brokerages have also said massive preemptive investments in LCD TV business to meet rising global demand and strong moves in handsets business will back up the perspectives of its shares.
``Since the fourth quarter, Samsung shares lost 6 percent, while those of its competitors suffered between 20- and 40-percent loss. That means investors are still positive about the company,’’ Hyundai Securities said.
``It is quite meaningful that quarterly operating profits of non-semiconductor sector started to surpass 1 trillion won in 13 quarters,’’ Daewoo Securities said.
On Thursday, Samsung said it will invest an additional 2.06 trillion won for LCD panels to meet rising demand on larger-sized TVs.
The investment, which will be made solely by Samsung Electronics, will go to the so-called phase 2 of its existing 8-1 line. Samsung said the line will be dedicated to producing large-sized TV panels such as 46- and 52-inch panels from the third quarter of next year.