Samsung president sees DRAM market worsen due to Thai flood

SEOUL Sun Oct 30, 2011 8:25am IST

A man is reflected on the window of an exhibition hall of Samsung Electronics at the company main office in Seoul April 6, 2010.REUTERS/Truth Leem/Files

A man is reflected on the window of an exhibition hall of Samsung Electronics at the company main office in Seoul April 6, 2010.

Credit: Reuters/Truth Leem/Files

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SEOUL (Reuters) - Samsung Electronics' president expected Thailand floods to further hit the computer memory chip market by hurting PC production until the first quarter of next year.

The flooding since July hit production of hard disk drives (HDD) in the world's No.2 producer of the major PC component, compounding the woes of the PC industry, already struggling with a slowing economy and a challenge from smartphones and tablets.

Samsung is the world's top maker of dynamic random access memory (DRAM) which is widely used in PCs and competes with Hynix (000660.KS), Elpida 6665.T and Micron (MU.O).

"There is too much uncertainty in the (DRAM) market... A disruption in PC production will have a direct impact on DRAM demand. Maybe (the DRAM market) will get worse," Jun Dong-soo, president of Samsung's memory business, told reporters late on Friday.

His comments were embargoed until Sunday.

The DRAM industry has suffered from weak demand and over capacity, with DRAM prices slumping about 50 percent in the third quarter alone. Major DRAM makers, except for Samsung, posted quarterly losses.

Jun said, however, that a shortage of HDD is seen lifting demand for a potential replacement, solid-state drive (SSD), currently used in only a small number fraction of PCs such as Apple's (AAPL.O) MacBook Air.

"It is true that we are seeing more orders, albeit not many, for SSD after the flood," he said.

But he said the high price tag of SSD would prevent the mass adoption of the data storage component despite benefits such as faster boot time and lower power consumption.

"It will take time that the SSD penetration rate will become a double-digit (from the current 3 to 4 percent)," he said.

He also downplayed market concerns that Samsung's intensifying legal battle with Apple would weaken Samsung's ties with its other key customers.

Samsung supplies Apple with memory chips and application processors used in Apple's iPhones and iPads, market experts say.

He expressed confidence on Samsung chips' competitiveness, saying, "We don't' care (about the legal row). We will leave (Apple) no choice but to use our components. It has no impact."

Samsung Electronics' chief operating officer Lee Jae-yong also told reporters this month that he discussed with Apple CEO Tim Cook supplying components until 2014 after attending a memorial service for Apple co-founder Steve Jobs. He did not elaborate.

Apple and Samsung have been engaged in a legal battle worldwide since Apple sued Samsung in the United States in April, saying the South Korean company's Galaxy line of mobile phones and tablets "slavishly" copied the iPhone and iPad.

(Reporting by Hyunjoo Jin; Editing by Ron Popeski)

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