PC DRAM Demand Weak

Samsung Says Its Q4 LED-Backlit LCD TV Sales Jumped 40 Percent From Q3

January 30, 2012 by Rebecca Day|Top News

LCD panel demand in 2012 is likely to remain “stagnant” on concerns over the global economy and oversupply, Samsung said in its Q4 earnings release Friday. Samsung’s Display Panel business posted an operating loss of 0.22 trillion Korean won on revenue of 8.55 trillion won in Q4, the company said.

The panel market recorded a 5 percent sequential increase for the quarter, riding Black Friday and holiday TV sales in North America, but IT demand was negatively impacted due to flooding in Thailand, Samsung said. Year over year, Samsung saw a 20 percent increase in panel shipments in Q4, driven by value-added products including LED-backlit LCD TVs and 3D TVs, it said. In 2012, Samsung will look to drive business with a “differentiated product mix,” comprising tablet, 3D and LED television panels, it said. Strong demand for smartphone display panels is expected to continue, the company said.

Samsung’s Digital Media and Appliances businesses -- including visual display, digital appliances, IT solutions, and digital imaging -- posted quarterly revenue of 16.96 trillion won, up 4 percent from 2010. Sales of LED TVs grew at a strong rate during Q4 on seasonal demand, achieving 40 percent sequential growth, Samsung said. The company outperformed the market by focusing on sales of premium models, shipping 55 percent more LED TVs than in Q3, it said. Samsung’s reinforced lineup of LED TVs, including premium models for advanced markets and region-specific models for emerging markets, also bumped up sales from Q3, the company said.

Weak seasonality in Q1 will reduce demand in the segment, but overall market growth is expected for the year, driven by strong momentum in emerging markets, Samsung said. In developed markets, Samsung will leverage its premium LED television offerings to lift sales as growing LED TV sales assume more than 60 percent of the global flat panel TV market in 2012, the company said.

Samsung’s Telecommunications business -- including mobile communications and telecommunication systems -- posted record quarterly earnings of 17.82 trillion won, up 52 percent from the previous year. Growth was driven by an “enhanced line-up of high-end smartphones,” led by the Galaxy II and Galaxy Note, which drove higher average selling prices, the company said. Full year 2011 operating profit for Telecommunications was up 90 percent compared with 2010. Telecommunications sales for fiscal year 2011 represented almost a third of Samsung Electronics’ total revenue for the year, the company said.

Shipments of Samsung smartphones rose by roughly 30 percent in Q4 over Q3, the company said. The company’s 2012 global outlook calls for demand for entry-level smartphones and tablet PCs to rise significantly, while the growth momentum for feature phones is expected to remain flat. Emerging markets and the spread of LTE wireless telecommunications technology have also contributed to the growth of the smartphone market, which is expected to grow by more than 30 percent, Samsung said.

The Samsung Semiconductor business saw continued weak demand for PC DRAM, but growth of specialty products including servers and mobile DRAM was “constant” due to rising demand for smartphones and tablet PCs, the company said. Profit dropped for memory chips and LCD, it said, but rapid growth in system LSI and OLED panels “was a promising signal for future growth,” it said. Revenue in Samsung’s Semiconductor Business -- including Memory and System LSI -- slipped 1 percent for the year. Overall in the quarter, the Semiconductor business was profitable, “amid weak market demand,” due to a mix of high-margin products including servers and solid state drives and “robust demand” for NAND chips used in mobile devices including smartphones and tablet PCs, the company said.

Demand for PC DRAM is expected to remain sluggish in Q1 due to static global market trends compounded by the disruption in the supply of hard disk drives from Thailand. Demand for NAND flash chips is expected to remain strong with the release of new mobile devices to market, while system LSI will see profits slip in Q1, due to seasonality, the company said. For the year, Samsung plans to secure price competitiveness in the market through differentiated mobile and server DRAM products by expanding 30nm-class-and-below processes, it said. For NAND, the company will expand 20nm-class processes, it said. Investment in system LSI will be expanded to “proactively respond” to rising demand for application processors and image sensors, the company said.