Samsung Cuts 2008 Sales Growth Target to 10%

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Samsung Electronics, the world’s No. 1 manufacturer of liquid crystal display (LCD) TV sets and memory chips, has lowered its yearly sales target due to worsening business conditions across the globe.

``We will increase our global sales by over 10 percent this year from the previous year,’’ Samsung Electronics Chief Executive Yun Jong-yong said at the company’s annual shareholders’ meeting held in Seoul.

In January, Samsung had projected more than 15 percent growth in this year’s sales riding on a boom in demand for global flat-screen TVs and soaring demand for high-end handsets, in addition to signs of a potential turnaround in the currently collapsed memory chip market.

Samsung reaped 63.18 trillion won in sales on a consolidated basis last year with a net profit of 7.43 trillion won.

``Business conditions this year look rather gloomy because of rising oil prices and the continued fluctuation of exchange rates spurred by the U.S. subprime woes,’’ Yun said by emphasizing the South Korean IT giant will increase its efforts to nurture new markets and promising sectors.

He also forecast that competition with its Japanese rivals will be fierce as they have invested massively into the semiconductor and mobile phone sectors.

``This year, we will use the knowledge gained from the Asian financial crisis a decade ago to go one-step further,’’ according to the Samsung vice chairman.

To back up such efforts, Samsung plans to increase its investments depending on market situations. The electronics company currently has reserves of 7.4 trillion won.

Separately, the head of its LCD division told reporters after the meeting that his company is expecting a positive outcome from ongoing talks with Sony for a joint investment in the second phase of eighth-generation lines to produce over 50-inch panels.

``We have engaged in talks with Sony and the results will be revealed in the first half,’’ Lee Sang-wan said, adding Samsung is still looking to develop next-generation displays with the Japanese company. Sony recently partnered with Sharp to build 10th generation production lines for over 60-inch panels.

Unlike earlier expectations, the shareholders’ meeting ended after just an hour with no clashes between shareholders and executives.

Since January, an independent counsel has been investigating an alleged bribery scandal involving all of the Samsung Group’s key affiliates.

The group’s former lawyer initially raised the kickbacks issue and the illegal wealth transfer to the group chairman’s only son Lee Jae-yong. Samsung refuted the accusations, claiming they were ``groundless.’’

Hynix Hopes to Reduce Tech. Gap

At Hynix headquarters in Icheon, Gyeonggi Province, the chief executive of the world’s No. 2 memory chipmaker said his company will reduce its technology gap in DRAM chip making with Samsung Electronics this year.

``Our plan to produce advanced DRAM chips using a fine 54-nanometer process is on schedule. We will totally reduce the technology gap with Samsung in 2008,’’ Kim Jong-kap said at the annual shareholders’ meeting held there.

Hynix plans full-scale production of these DRAMs in the third quarter of the year, while Samsung is reportedly moving to produce computer chips with 56-nanometer process, possibly from the second quarter.

Hynix also plans to increase its use of 300 millimeter chip fabrication lines to account for 95 percent of its entire DRAM production by 2012. The company runs three 300-millimeter lines and five 200-millimeter lines in its plants South Korea and China.

On the question over the ongoing technology transfer talks with Taiwan-based ProMOS, Kim said he sees no problems in the negotiations.

``We expect DRAM prices to rebound from the third quarter and the flash memory chip sector is likely to see a supply and demand balance in the second half,’’ Kim said, adding it was a possible to cut investment by as much as 1 trillion won depending on the market situation.

Hynix has been suffering from falling profits due to its DRAM-focused business structure. Prices of DRAMs have remained at a record low level after plunging over 90 percent in 2007.

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