Samsung suffers as chip prices fall

Samsung Electronics, the world's largest computer chip manufacturer, warned yesterday that its first-half profits would tumble.

The company yesterday released interim sales figures showing a modest 3 per cent rise to 9000bn South Korean won (pounds 6.3bn), but the "net profit fell sharply,'' said Choi Hyung Joon, director of Samsung's accounting division.

Analysts predict that the first-half profit, due to be reported next Thursday, will total one-quarter of last year's 453.4bn won (pounds 317m), reflecting a steep decline in global prices for computer chips.

The spot price of the benchmark 16 megabyte dynamic random access memory chips, or Drams, used in computers and other electronics products, could be bought for $5.95, half the price achieved at the beginning of the year.

Samsung and other Korean semiconductor makers have attempted to reverse the fall in global chip prices by cutting Dram output by 25 per cent in July.

"Samsung's profit will improve in the second half, as it is shifting its production lines for higher value-added chips," Kim Nam Tae, an electronics analyst at Samsung Securities said. He expects the company's net profits to rise 170 per cent from a year ago to 450bn won for the whole of 1997.