Samsung warns of market saturation

Samsung Electronics, memory chipmaker, warned of an oversupply in the computer memory chip market from next quarter as a sputtering global economy may further weaken PC sales.

The downbeat comment from the South Korean firm raises concerns the boom in the dynamic random access memory (DRAM) sector may be nearing an end.

"We all know the PC market is not in a good shape now and if demand can't pick up, inventories will go higher," said John Chiu, a fund manager at Taiwan's Fuh Hwa Securities Investment Trust.

"But we might pin some hopes on the upcoming long holiday in China in October and the Chinese New Year holiday early next year, if demand picks up then, some inventories might can be absorbed."

The caution by Samsung adds to a series of previous warnings by Samsung and its local rival Hynix Semiconductor, among others, that prices would fall in the second half due to the uncertain economic outlook.

"If the PC market continues to slow, we may see a kind of oversupply in Q4 or Q1," Kwon Oh-hyun, head of Samsung's chip business, said at a media conference at its annual mobile solutions forum in Taipei.

"Because of mobile phones and servers, the DRAM market will be stable, while PC is the weakest sector and it depends on demand from the US Thanksgiving" in late November, which typically marks the beginning of the heavy pre-Christmas sales season.

Based on Thomson Reuters' StarMine Analysts Revision Model, a measure of change in analyst sentiment, Samsung ranks above its key DRAM rivals, Elpida Memory, Nanya Technology and Hynix, but below Micron Technology.

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