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Samsung responds to weaker demand

Seoul, 14 Oct 2008

Samsung Electronics, the world's largest maker of liquid crystal display (LCD) panels, is "adjusting" production amid sluggish demand for TV and monitor screens.

The outlook for the LCD sector is bleak as the global downturn spreads, curtailing consumer appetite for pricey flat TVs and new personal computers.

"As demand is weakening, we are responding in a flexible manner through output control," said spokesman James Chung.

He said the company had not made any meaningful output cuts, downplaying a local newspaper report that said Samsung had cut production by 5% since August. He did not elaborate.

Samsung's comment comes as smaller LCD makers, including local rival LG Display and Taiwan's AU Optronics, have slashed output in recent months to fight falling screen prices and control supply.

But those efforts have so far failed to reverse the market trend. For number two player LG Display, which is set to report earnings later today, analysts estimate average LCD prices likely fell nearly 20% in the July-September quarter.

Prospects remain gloomy for Samsung's mainstay memory chip business, which is languishing in a severe cyclical downturn compounded by weakening demand.

Kwon Oh-hyun, president of Samsung's chip business, was quoted by online news provider EDaily on Tuesday as saying the current weakness in the chip market would linger into next year.

"The sluggishness could persist through the first half of next year, and although a recovery could come in the second half, the slowing economy is an issue," Kwon was quoted as saying.

In an interview with Reuters last week, a top executive at Hhnix, Samsung's smaller rival, said the company was "cautiously hopeful" that the market would reach "some sort of balance" by the second half of 2009.

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