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Samsung upbeat about memory vhip recovery

By Moon Ihlwan (BusinessWeek)
October 30, 2009

A year ago, the global semiconductor industry was fraught with overcapacity. The situation was particularly bad for memory chips.

But suddenly the tech industry is facing supply constraints for DRAM (dynamic random access memory) chips used in computers to hold data while processors run programs and NAND flash chips used in mobile gizmos to store music, photos and data.

That’s good news for the tech sector looking for signs of recovery after a yearlong slump. And no other company will benefit more from a semiconductor supply shortage than Samsung Electronics, the world’s largest maker of memory chips.

The Korean company’s chip business chief, Kwon Oh Hyun, said Oct. 28 he expected the supply of both DRAM and NAND chips to fall slightly short of demand next year, making chip prices stay firm. Samsung aims to increase its chip revenues to $25.5 billion in 2012 from an estimated $16.6 billion this year, he said.

The optimistic outlook stems from confidence that Samsung has widened its gap with rivals during the downturn. Samsung kept investing in upgrading production technologies and equipment while Japanese, American and Taiwanese rivals cut back in spending.

Industry analysts say Only Samsung and Hynix Semiconductor, another Korean company, can now produce DRAM chips by printing circuit lines on wafer disks with 50 nanometer technology – a tool increasing productivity by 30 percent from the previous-generation technology. Samsung is poised to report a sharp rise in profits this year, thanks partly to a turnaround in its chip business.

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